Regulation E Protects Consumers, Not Businesses
Here is Regulation E in black and white:
Limitations on amount of liability. A consumer’s liability for an unauthorized electronic fund transfer or a series of related unauthorized transfers shall be determined as follows:
1. Timely notice given. If the consumer notifies the financial institution within two business days after learning of the loss or theft of the access device, the consumer’s liability shall not exceed the lesser of $50 or the amount of unauthorized transfers that occur before notice to the financial institution.
2. Timely notice not given. If the consumer fails to notify the financial institution within two business days after learning of the loss or theft of the access device, the consumer’s liability shall not exceed the lesser of $500 or the sum of:
(i) $50 or the amount of unauthorized transfers that occur within the two business days, whichever is less.”
Businesses do not get this kind or protection. So when business accounts are compromised, they often have to fight for their money. And today, more than ever, they are losing. But banks are losing, too. The only winners here are the criminal hacking enterprises.
In order to meet the Federal Financial Institutions Examination Council’s compliance guidelines by January of 2012, banks must implement multiple layers of security. Called out in the recent FFIEC guidance was using complex device identification and moving to out-of-wallet questions.
Financial institutions and their clients aren’t only losing millions to fraud; they are losing millions more fighting each other. It makes more sense for banks to beef up security (all while properly managing friction for legitimate customers) than to battle with their customers.
Financial institutions could protect users and themselves by incorporating device identification, device reputation, and risk profiling services to keep cyber criminals out. Oregon-based iovation Inc. offers the world’s leading device reputation service, ReputationManager 360, which is used by leading financial institutions such as credit issuers and banks, to help mitigate these types of risk in their online channel.