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Financial Institutions Losing Clients as a Result of Single Fraud Attack


August 13 - Guardian Analytics, a market leader in behavior-based fraud prevention solutions, together with independent research firm, Ponemon Institute, have announced the results of the third-annual Business Banking Trust Study. Nearly 1,000 owners and executives of small-and-medium-sized businesses (SMBs) in the United States participated in the study. Year over year results show that SMBs are ongoing victims of account takeover and still piling up losses due to fraudulent ACH, wire and other transactions.  The most revealing findings are that, as a result of fraud, SMBs are not only losing confidence in their financial institutions' fraud prevention practices (30 percent of responses), but are taking some or all of their banking business elsewhere (40 percent).

The study revealed that 73 percent of online fraud attacks result in the successful transfer of money. Despite efforts by financial institutions to recover funds, 61 percent of reported fraud attacks result in lost funds. Reimbursement of losses varies – in some cases the business takes the full loss, in some instances losses are shared, and in one quarter of instances, banks reimburse the business fully for any losses. In the end all parties suffer significant financial loss as a result of fraud.

"The Ponemon Institute's study clearly outlines the strategic impact that fraud has on a financial institution – lost profits and lost customers," said Terry Austin, CEO, Guardian Analytics. "Further, recent court cases have sided with businesses when it comes to fraud liability, emphasizing financial institutions need sound practices and security to protect customers from account takeover attacks. Fortunately, there are fraud prevention solutions that are proven to be effective, giving financial institutions a significant opportunity to restore trust with their customers by taking a more proactive stance in preventing fraud."

Additional findings from the 2012 Business Banking Trust Study include:

SMBs are rapidly increasing their use of online and mobile banking.

Fraud attacks against businesses are widespread

SMBs expect their financial institution to be the expert, but think they're not doing enough

There is room for improvement for all parties' fraud prevention efforts

Fraud losses result in lost business for FIs

"This year's data confirms that SMBs are looking to their financial institution to be the expert on fraud prevention, and they have every right to do so," said Dr. Larry Ponemon, chairman and founder, Ponemon Institute. "Fraud techniques continue to evolve rapidly and financial institutions must continually monitor and update defenses to stay ahead of criminal activity. The FFIEC Guidance reinforces this by requiring layered security that, at a minimum, includes anomaly detection, plus risk assessments whenever something in the threat landscape changes, such as the discovery of another new threat."

The Ponemon Institute's 2012 Business Banking Trust Study, commissioned by Guardian Analytics with surveys completed in May 2012, provides insights into SMBs' online banking behavior, their views of banks' security practices, and the impact just one fraud incident can have on banking relationships. This year's study was expanded to included sections on ACH payments, mobile banking, and wire transfers. It also provides recommendations for banks and businesses to prevent fraud and improve client trust. Download the report here.

About Ponemon Institute
The Ponemon Institute© is dedicated to advancing responsible information and privacy management practices in business and government. To achieve this objective, the Institute conducts independent research, educates leaders from the private and public sectors and verifies the privacy and data protection practices of organizations in a variety of industries. For more information, please visit

About Guardian Analytics
Guardian Analytics is the pioneer and leading provider of behavior-based fraud prevention solutions for electronic banking. With nearly 200 customers, more financial institutions trust Guardian's SaaS solutions to protect their clients' assets and conform to FFIEC expectations for anomaly detection than any other solution. Based in Mountain View, Calif., Guardian Analytics is privately held with venture funding from Foundation Capital, Sutter Hill Ventures, Split Rock Partners and Triangle Peak Partners. For more information, please visit