August 17, 2015 While convenience is generally a reason why people turn to innovative technology in the mortgage industry, it’s important for mortgage lenders and servicers to remember this: technology is not a guaranteed safeguard against potential fraudulent activity.
When the affair-encouraged dating website, Ashley Madison, got hacked, it ultimately had more of an effect on members than merely risking their financial information. Blackmail schemes came to light, putting the 37 million members at personal risk. Risky behavior and carelessness with your data can ultimately put your well-being in danger. So, lenders and servicers should assure consumers that their provided data is secure as well as educate consumers on how to keep their financial information as secure as possible.
When a company such as Target encounters a data breach, consumers may need to deal with the frustrating task of changing their account information and/or ordering a new credit card, but that’s typically as far as the repercussions go. However, with the data breach that occurred at Ashley Madison, lives of users and the users families can be dramatically altered if the information goes public. This could easily affect the mortgage banking industry, which is why it is important to have systems with redundancies in place to protect your clients’ information and be cautious of who/which companies you share your information with.
There are two main ways you can help educate your consumer clients on how to safeguard their financial information:
1. Let them know to be careful where they share their information.
2. Practice vigilance by reviewing statements.
Many consumers willingly give away their personal information without realizing the negative effects that can come from this seemingly simple act.
Many people do not know that they do not have to provide their financial information upon every request. We can elect not to share information such as social security numbers with doctors’ offices, point-of-sale transactions and verifications.
Additionally, let them know that paying close attention to statements and alerts may seem like a simple thing to do, but not everyone does so. In a survey conducted by technology company Inlet, a shocking 32 percent of respondents stated they do not even review itemized bills before paying them. The survey also discovered fewer than 25 percent of respondents use paper checks and snail mail to pay bills, while about 10 percent get email reminders and 5 percent get text reminders when their bills are due. One tactic fraudsters sometimes use is making a small transaction to see if the account is still active.
Consumers should know that by reviewing statements as they arrive, fraud can be discovered and/or prevented. This will eliminate the mad dash to rectify issue when a consumer is applying for a first time mortgage or refinancing.
Paper statements for credit cards and utility bills as well as bank statements are quickly becoming relics of the past. Having all the information available online, and the option to receive an e-statement, has encouraged many individuals to turn to these methods of relying on account information as it provides an easier option. Lenders should explain to consumers that paper statements, however, do still have a meaningful purpose should they choose to receive them. Hard copies of bills give consumers the ability to really “see” the charges on paper; once you review them, you can shred them to prevent fraud while e-statements can unfortunately be stolen from hacked accounts. Hard copy bank statements can actually confirm money was in your account should there be a dispute.
In fact, consumer expert, Clark Howard, suggests saving bank statements for a year, that way if your account is hacked, you do have proof that the funds were once there. Within the mortgage industry, it’s important for servicers and lenders to keep track of all receipts, contracts, title documents, closing documents, etc.
In addition to implementing internal safeguards, lenders and servicers can remind their clients of how they can better protect their personal financial information as well. By making an extra effort to implement a few simple safeguards instead of blindly turning to technology, personal information can be kept personal, as it should be.