Banks adapt security measures as fraud schemes advance

Technological advances have produced wonders such as 3D printers, smartphones and worldwide video chat, but with the good also comes the bad. New technology also means innovative ways to steal, scam and take advantage of businesses and financial institutions. Far removed are the days of Old West holdups and grainy bank footage on the evening news; today’s thieves take their money both physically and digitally.

The FBI has had a primary role in bank robbery investigations since the 1930s, when John Dillinger and his gang were robbing banks and capturing the public’s imagination. In 2011 – the most recent information available – more than $38 million was stolen and more than 100 people were killed or injured in about 5,000 robberies of financial institutions reported across the nation, according to the FBI’s Bank Crime Statistics report.

In the Show-Me State, the FBI narrows that number to 110 robberies in 2011. Springfield Police Department’s uniformed crime report shows four of those took place within Springfield city limits.   

“Bank robbery is not as uncommon as you might think,” said Tom Fowler, president of Springfield’s State Bank of Southwest Missouri. “We were robbed about 10, maybe 15 or so, years ago. Luckily, the thieves were apprehended a short time later a couple blocks away. Not all banks are so lucky.”

According to the FBI, only 20 percent of stolen loot is ever recovered by law enforcement officials, which translated to only about $8 million in 2011.

The Western District of the Office of the United States Attorney is responsible for prosecuting such cases in the Ozarks. While sentencing is harsh, justice typically isn’t swift. In a recent example, Mark Joseph Morris, 49, of Springfield, was sentenced Nov. 20 to 72 years and six months in federal prison for a string of Bank of America robberies dating back four years to 2008.

Beefing up security
Providing security services to more than 70 percent of all banking institutions in southwest Missouri, Federal Protection Inc. has called Springfield home for 44 years. Founded in 1969 by U.S. Congressman from Missouri Mel Hancock, Federal Protection began as an alternative solutions provider for an independent bank in southwest Missouri. Thirty-year CEO and President Kim Hancock has led the company from three employees to a current team of 185. Hancock said his company’s most utilized service is by far video surveillance.

“We started out with 16 mm film cameras and have kept advancing since,” he said. “We offer commercial and residential systems, too, but specialize in financial institutions. Surveillance is the top request.

“Most banks have digital cameras not just in their lobby, but throughout the bank. Cameras can be used to monitor employees as well.”

Hancock said gone are the days of a single security guard in the lobby. Most banks maintain a security person of some nature, but that person typically sits in a room watching multiple video feeds.

“A guard can only monitor one area at a time,” he said. “Someone watching security cameras can see just about anywhere.”

Unlike many security companies that offer a one-time service, Hancock said Federal Protection operates on a pay-as-you-go maintenance system and continually upgrades cameras for newer versions with high-resolution lens for better video quality.

Of the more than 5,000 banks robbed in 2011, almost all had an alarm system and surveillance cameras, according to the FBI. Hancock said those measures alone aren’t enough.

Federal Protection also offers defense such as vault doors, bullet-resistant glass, safety deposit boxes and protected pneumatic tubes for drive-thru use. Bank President Fowler said State Bank of Southwest Missouri has utilized Federal Protection systems for 25 years.

“Systems such as our time-lock vault help prevent large robberies,” he said. “You can’t have enough protection. In my experience, a bank needs all it can get. Every deterrent is an extra hurdle for the criminal element.”

According to the FBI, following alarm system and video surveillance, top security measures employed by banks include bait money, tear gas, dye packs, electronic tracking and bullet-resistant enclosures.

Digital thieves
Technological advances also mean banks and financial institutions must not only protect the consumer’s physical product in the safe, but also digital currency.

According to a 2012 Federal Trade Commission report, even after several consecutive years of decline, credit and debit card fraud was still the 10th most prevalent type of theft in the United States, representing 3 percent of all complaints reported. Categorized by the FTC as a form of identity theft, card fraud has slid by more than 1 percent annually since 2010, but still accounts for 13.4 percent of all identity thefts nationwide, second only to government documents and benefits fraud. In Missouri, FTC stats support the national average, accounting for 647 of the state’s reported 4,500 cases of identity theft.

Nichole Goddard, director of retail for Commerce Bank’s Springfield branches, said the bank constantly monitors customer accounts for suspicious activity.

“We tend to see a lot more scams, identity theft and card fraud this time of year,” she said. “People are buying more items online, so that can be a contributing factor.

“I guess the criminals need extra holiday shopping money, too.”

According to a 2012 study by global financial services firm Aite Group, 42 percent of U.S. cardholders – debit, credit and prepaid – have experienced some form of card fraud in their lifetime, compared with 27 percent of cardholders in all other parts of the world.

In part, the Aite report attributes the fraud uptick to Americans’ high usage of card transactions versus cash, but also points to a key factor – American commerce hasn’t adopted the EMV standard.

Short for Europay, Mastercard and Visa, the global EMV standard is used by most other industrialized nations, utilizing microchip security to store, maintain and encrypt all personal identifying information for the cardholder. As part of a multiyear phased adoption outlined by the Payment Card Industry Security Standards Council, card issuers are expected to begin circulating chip-enabled EMV cards between 2014 and 2016.

Goddard said Commerce offers an identity theft recovery service, assisting customers who have fallen victim. Goddard declined to disclose specific bank safeguards, citing concern over customer security, but said Commerce also trains bank staff to be on the lookout.

“Our staff across the board are trained on keys to watch for, but I think the biggest deterrant is customer education,” she said. “We get calls all the time about new scams. Lottery scams are popular, as well as scams for people who sell things online like at eBay.

“It all boils down to one thing – if it’s too good to be true, it probably is.”

Writer Brian Hom contributed to this report.