Staff Report
Published Jan. 3, 2013

South Carolina banks plan to launch an early warning fraud detection system to warn members about possible suspicious activity.

The system is one measure the S.C. Bankers Association is taking to protect consumers whose accounts might have been breached in the wake of the hacking of S.C. Department of Revenue computers, said Fred Green, president and CEO of the association.

The warning system, expected to roll out early this year, will link association members and other state financial institutions, Green told a special S.C. Senate panel that’s investigating the hacking incident.

When one financial institution notices suspicious activity it will notify all other banks and credit unions linked to the warning system, the association said. The initiative will enable member banks and other financial institutions to quickly identify suspicious activity, he added.

The fraud detection system is necessary because the Experian credit reporting service the state is providing does not cover bank accounts, Green told the panel.

Green also told the senators the banks are seeking to secure a list of accounts that were compromised in the hacking, in order to determine which accounts are still active.

The idea, Green said, is to be better able to bring peace of mind to those customers who are not at risk for having their bank accounts tampered with, and to put greater protections on the accounts of those who may be vulnerable.

Banks also are liable if a customer’s account has been breached, according to reports.

If a customer reports fraudulent activity that’s upheld by an investigation, the law requires banks to redeposit the money.

The hacker, who law enforcement authorities said was based in Russia, stole 74.7 gigabytes of data containing information on individual and business tax returns that had been filed electronically since 1998.

That data includes Social Security and business ID numbers, bank accounts and credit cards listed on tax returns. The latest report shows that information was stolen from 3.8 million individual taxpayers, 1.9 million dependents and 699,900 businesses.

The state has offered victims access to a free credit report service from Experian for one year to guard against potential ID theft.

The bankers association has about 80 members.

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