Let’s say you are in need of gas and see two gas stations ahead. Both are advertising 87 Octane. However, Gas Station ABC is advertising at $4.00 per gallon and Gas Station XYZ is advertising at $2.00 per gallon. Question – which station do you choose?
I am a simple mathematician – but I might hit Gas Station XYZ and maybe buy some Lottery tickets with my savings!
However – I continue to be amazed by banks that are being asked to make this same decision to comply with FACTA – and yet they many times continue to choose Gas Station ABC. What I am talking about is how many banks are considering how to comply with FACTA Section 114B – which requires card issuers to validate consumer requested address changes. FACTA says that you can either send a letter to the former address of the consumer requesting the change – or used some other reasonable risk-based approach. More than not – banks are thinking of adopting the letter strategy at a cost of anywhere from $0.75 – $2.00 per address change. With 15% of consumers moving annually – this cost can add up to $0.30 in incremental cost per account holder each year.
Adopting a risk-based or information based approach can cost much less, while also providing protections that the letter strategy cannot. In a current economy that has banks scrambling to cut costs, Gas Station XYZ looks pretty good.