October 14, 2010

With the ongoing threat of account hacking, phishing, spear phishing, keyloggers, trojans and the general proliferation of electronic fraud, perhaps it's time for financial institutions to turn some of the responsibility for consumer identity protection back onto the consumer.

At least that's one of the ideas posed by JR Smith, CEO of Czech Republic-based security software provider AVG Technologies.

"It's not really the bank’s fault if your info is stolen on a machine that you don’t have protected," Smith says.

When it comes to security, Smith feels banks and financial institutions are doing a good job of protecting their systems from the threat of fraud. At least on the back end. But the customer remains a weak link in personal information security.

Smith likens the need to drive consumer action in identity protection to the insurance industry's push to get drivers to wear seat belts. It's no longer an issue of awareness; consumers generally know about the threats out there. Instead it's finding a way to incentivize customers to install some form of security software on their personal computers in order to help ensure their own safety.

"Why not give no fee checking account if they can prove there’s security on their laptop," Smith asks.

Or, perhaps, he adds, have the customer share the cost of fraud or potentially deny access to online services.

"The consumer does not feel the level of responsibility and accountability," Smith says. "They see it as a huge headache, but don’t think of it as losing everything, or about the consequences for the businesses affected."

AVG gives away a free version of its antivirus software, and offers a paid premium version as well. The company also has a link scanner for both PCs and Macs that Smith says is capable of checking links before users click on them to determine whether there is any threat, something that's seen a rise with the growing use of social networks.

"The criminals out there creating all this malware, they’re incredibly organized," Smith says. "There’s a whole supply chain. It’s an industry, a very big industry."

Smith adds that some banks and financial institutions are doing the right thing by giving away trial versions of security software as a part of new account welcome packages. In the U.K., AVG has partnered with some banks to provide its software to customers.

"Part of the reason that we’re so passionate about giving it away for free is the more people are protected, the more it thwarts cybercrime altogether," Smith says.