Concerns about fraud and hacks in the retirement and insurance industries has led to a new platform that will enable financial services companies to better detect and prevent account takeover attempts.
Dubbed “FraudShare,” the platform was developed by LIMRA, LOMA and the Secure Retirement Institute in collaboration with 10 financial services firms to help companies identify fraudulent activity and protect customer and company assets.
According to the Oct. 23 announcement of the platform, FraudShare will serve as a fraud information clearinghouse and alert system that allows companies to better protect themselves while providing industry-level reporting of account takeover activity.
“Our members expressed deep concern about the growing occurrence of account takeover fraud they were witnessing and asked us to build an industrywide solution that could help them,” explains Russell Anderson, head of the LIMRA and LOMA Fraud Prevention Program.
And while consumers tend to worry more about “high-touch” products such as credit cards and tend to worry less about retirement accounts, plan sponsors do seem to be taking notice of the growing threat. Recent research by LIMRA and the Boston Consulting Group finds that 7 out of 10 financial services companies consider fraud a growing concern, with increasing reports regarding the incidence of account takeover fraud for individual life insurance, annuity contracts and DC plans. In fact, more than half of companies reported seeing an increase in fraud attempts in the DC plan space, with the most common attacks centering around account takeovers and fraudulent claims and disbursements.
For example, a 401(k) participant recently sued a plan sponsor, recordkeeper and plan trustee/custodian to recover stolen funds stemming from the apparent “hack” of her account in which the thief stole nearly $100,000 in retirement savings.
“Beyond the tangible damages, such as replenishing customer accounts, and potential fines, legal fees and lawsuits, companies risk losing something even more valuable: consumers’ trust,” Anderson further emphasizes.
The 10 financial firms that advised on various development and implementation criteria for FraudShare included representatives from AIG, John Hancock Life Insurance Company, MassMutual, Nationwide, New York Life, Pacific Life Insurance Company, Prudential Financial, Sammons Financial Group, Securian Financial and Symetra Life Insurance Company.
