Generating nearly $4 billion in annual revenue, identity protection is big business – one that has consistently drawn the attention and ire of regulators.  At a time when the identity protection industry is generating more revenue than ever, regulatory pressure that once alienated the largest resellers may soon ease.  Such a change would harken a reentry of US retail banks and credit card issuers, pushing total revenue from identity protection to $5 billion or more practically overnight.

Once solely the purview of the FTC, the CFPB has since taken up the mantle of de facto identity protection industry regulator.  Since 2012, $1.6 billion in fines have been levied in relation to identity protection and similar products primarily sold through US financial institutions.  Regulators cited dubious marketing and sales practices by identity protection providers as predatory or unfair to the consumer, inevitably leading to monetary punishment.  With each new fine or settlement, FIs backed away from offering these products to their customers.  As a result, far fewer major FIs continue to sell these products, and they are often bank-branded with sales and service handled directly by the FI as a way of avoiding past transgressions. 

A new US President and emboldened Congress may effectively change the dynamic that drove so many FIs from the identity protection space.  The CFPB is under attack, facing court challenges and the threat of defunding from legislators.  A defanged CFPB would mean less risk for FIs that chose to return to the identity protection reseller market, and as the practices that once put providers and FIs in regulatory crosshairs have become less of an issue there would be little to deter FIs from getting back into the game.  The real question then becomes: which identity protection provider should FIs trust their customer’s identities to?  Javelin has continually tried to answer this question, and it is one I suspect that this competitive industry would certainly welcome becoming more frequent.

Author

About Al Pascual

An accomplished industry analyst, market researcher, and financial industry practitioner, Al Pascual is Javelin’s Research Director and Head of Fraud & Security. As Research Director, Al leads Javelin’s Advisory Services and Custom Research businesses. He oversees growth of these businesses while ensuring that Javelin’s research content meets quality standards and provides the innovative perspectives that clients expect from the firm.

As Head of Fraud & Security, Al provides clients actionable insights on a variety of fraud and security issues, acts as a partner in developing strategies for managing risk, and identifies and raises awareness of future threats and solutions. Al researches a range of topics, including the applicability of biometrics in banking and payments, the effect of data breaches on the integrity of consumer identities, the relationship between identity fraud and loyalty, and the best methods for securing payment data and transactions.

Al has presented findings from Javelin’s rigorous, industry-leading research at conferences around the world, including BAI, CARTES, Money20/20, NACHA, and RSA. Al has provided commentary on fraud and security issues to American Banker, Bloomberg, CNNMoney, Fox Business, Reuters, The New York Times, The Wall Street Journal, The Washington Post, and Wired.

Previously Al held risk management roles at HSBC, Goldman Sachs, and FIS. He is a member of the Association of Certified Fraud Examiners, the International Association of Financial Crimes Investigators, and the Federal Reserve Secure Payments Task Force. Al also serves on the board of advisers to the Information Security Media Group. He earned a Bachelor of Arts degree in History from the University of South Florida.

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