Because of new USPS service standards, first-class letters traveling longer distances could take up to five days to arrive. With plenty of institutions still sending letters to verify addresses changes for FACTA compliance, how might the new service standards affect account takeover rates?
Address verification letters, in general, do very little to prevent account takeover. Even if the letter reaches the victim in a day or two of the address change, today’s criminals are capable of draining accounts in a matter of hours. More account takeover attempts would be stopped by using automated analytic solutions, which are allowable under FACTA; financial institutions don’t even need to send letters.
For institutions that still do rely on letters, catching the account takeover within the first few days depends on the letter quickly reaching the victim, who resides at the original address. This is where the new USPS service standards come into play.
Smaller, local institutions tend to mail address verification letters from the market in which their customers or members live. This means that address verification letters could arrive even faster than they have in the past, especially if the letter is mailed from a distance of less than 10 miles.
However, larger institutions are more likely to mail their verification letters from a centralized distribution center that could be hundreds or thousands of miles away from the customer or member’s original address. In this case, it could take up to five days for the victim to receive notification of an address change.
The USPS has stated that 61 percent of first-class mail will keep their current service standards. However, this is an average, and some delivery areas could be harder hit than others. The Washington Post created an interactive map that demonstrates how many days it could now take for first-class mail to get from one Zip Code to another Zip Code, and reported that: “Seventy percent of first-class mail sent to Nevada will take longer to arrive, according to The Post’s analysis, as will 60 percent of the deliveries to Florida, 58 percent to Washington state, 57 percent to Montana, and 55 percent to Arizona and Oregon. In all, at least a third of such letters and parcels addressed to 27 states will arrive more slowly under the new standards.”
Only time will tell how or whether the new USPS standards will impact account takeover rates. Much has to do with how financial institutions choose to respond. Will the new delivery timelines, combined with postage increases, be the impetus for institutions to ditch address verification letters altogether, moving to automated analytics technology for assessing the risk of address changes?
And while they’re at it, will institutions also beef up their risk assessment of email and phone-number changes so that fraudsters who hack into accounts can’t disconnect consumers from receiving email and SMS alerts about activity on their accounts?
The new USPS standards may impact financial institutions’ operations, but they provide a welcome opportunity to reassess – and improve – FACTA compliance while migrating to approaches that also help stop identity fraud.