Prevention – taking steps to greatly reduce the possibility of an occurrence. This is easier for things you control (installing redundant power supplies and hard drives in your network servers) than things you don’t control (weather).
Minimization – planning and testing will contribute to a lessening of the impact of any occurrence
Restoration – again, the planning and testing you’ve done will enhance your ability to respond and begin to restore operations.
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I’ve recently encountered an issue with several of my bank clients that I think would be of interest to many of you. The company, Blizzard, that offers the popular World of Warcraft on-line game, has increasingly become a target of hackers in search of fresh credit and debit card numbers.
You may want to consider a general alert to your customer base about carefully monitoring for any unusual activity on their debit and credit cards.
One suggestion would be to consider a pre-paid card to use only for this activity, limiting exposure to any such breach. Blizzard is not the only such gaming company with these issues, but we are presently seeing a LOT of activity around their site.
It is hard to overstate the importance of knowing your customer and their activities.
Companies that aggressively pursue an account relationship with you, including those offering to keep large balances, or acquire an ownership stake in your institution, require additional scrutiny.
This is another FDIC issuance that raises the spectre of your bank being charged under Section 5 of the Federal Trade Commission Act “Unfair and Deceptive Acts or Practices” if you are seen as contributing to such behavior on the part of your customer.
As with any relationship whereby you allow customers to originate payments, constant oversight: establishing and monitoring daily limits, both dollar and transaction volume wise, monitoring and addressing high return rates on debit items, and “smell testing” (do these feel like legitimate business practices?) are all appropriate.
As always, you should document your risk assessment, risk management practices, and your monitoring and oversight of customer activity.
One of the best ways to avoid crisis issues after a disaster is to be better prepared BEFORE a disaster. The following material, from FDIC, is good information to share with your customers about ways they can prepare beforehand. Effectively communicating these ideas to your customers can make all the difference in how well your institution is able to serve customers after a disaster:
The FDIC Offers Tips on Preparing Financially for a Natural Disaster or a Fire
Other topics in the latest FDIC Consumer News include personal payments by smartphone or mobile computer, plus solving mysteries of old bank accounts
|FOR IMMEDIATE RELEASE
September 7, 2011
Hurricane Irene, the earthquake that shook the East Coast and the deadly tornado that hit Joplin, Missouri are recent reminders that disasters rarely give advance warning and can happen anytime. That’s why it’s important for households to have a plan for protecting important assets and conducting day-to-day financial transactions in the event of an emergency. The Summer 2011 issue of FDIC Consumer News features tips on how to prepare financially for a natural disaster, a fire or another tragedy, especially one that requires people to evacuate their home and not return for days or weeks.
Other timely topics in the latest issue include what to know before signing up for person-to-person, or “P2P,” electronic payment services using a smartphone or mobile computer; how to solve mysteries of old bank accounts; and an update on new standards for and disclosures by mortgage loan professionals.
Here are examples of some of the consumer tips in the latest newsletter:
Preparing financially for the unexpected: The FDIC newsletter suggests that consumers:
- Anticipate what could go wrong by thinking about the most likely hazards for their community and periodically reviewing their insurance coverage;
- Consider services that can help access funds and manage finances away from home, such as direct deposit and banking by computer or smartphone;
- Have essential items in one or more emergency evacuation bags or boxes that are waterproof, easy to carry and kept secure; and
- Be on guard against fraudulent “charities” or “businesses” scheming to profit from the situation.
Making personal payments by mobile devices: As with any form of payment, understand the costs and potential risks of this increasingly common service from some banks and non-banks. Legal protections for P2P services may differ depending on whether the services are provided by a bank, and the security of the device should always be a concern.
Researching old bank accounts and, perhaps, recovering something valuable: A consumer who finds old account information should first determine whether the bank is open, closed or has merged with another bank. The FDIC’s Bank Find database at www2.fdic.gov/idasp/main_
Finding a mortgage loan originator: As a result of a 2008 law to enhance consumer protections and reduce fraud in the residential mortgage industry, a free, searchable database now provides useful information about all state-licensed and federally registered mortgage loan originators. In the future, the database will be expanded to include information about certain relevant disciplinary or enforcement actions.
The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information about financial matters, free of charge. The Summer 2011 edition can be read or printed at www.fdic.gov/consumers/
To find current and past issues of FDIC Consumer News, visitwww.fdic.gov/consumernews or request paper copies by contacting the FDIC’s Public Information Center toll-free at 1-877-275-3342, by e-mail firstname.lastname@example.org, or by writing to the FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226.
There are two ways to subscribe to the quarterly FDIC Consumer News. To receive an e-mail about each new issue with links to stories, go towww.fdic.gov/about/
The FDIC encourages financial institutions, government agencies, consumer organizations, educators, the media and anyone else to help make the tips and information in FDIC Consumer News widely available. The publication may be reprinted in whole or in part without advance permission. Organizations also may link to or mention the FDIC Web site.