In 2024, a national banking regulator required all financial institutions within its jurisdiction to adopt a new high-security biometric authentication system for online transactions, replacing password-based access to curb digital fraud. Eighteen months after full implementation, official data revealed that over 90 percent of retail banking customers routinely used the biometric system. Paradoxically, over the same 18-month period, the total monetary losses incurred by commercial banks due to online banking fraud rose by 28 percent nationwide.
Which of the following statements, if true, help(s) to resolve the apparent discrepancy described above? Select all that apply.
- The biometric system virtually eliminated low-value fraudulent transactions, prompting sophisticated cybercriminal syndicates to shift their efforts toward high-value corporate accounts using targeted wire-fraud schemes that yield far larger sums per incident.Answer
- Concurrently with the biometric deployment, the regulatory agency instituted an automated real-time loss tracking protocol that captured previously unreported fraud incidents, whereas prior monetary estimates relied on voluntary manual reporting by victims.Answer
- CPhysical bank branch burglaries and automatic teller machine thefts decreased by 35 percent over the same 18-month period due to increased police patrols around commercial financial centers.
- DCommercial banks spent significantly more money advertising the security advantages of the biometric authentication system than they spent on customer support service upgrades.
- ERetail customers reported higher user satisfaction scores with the biometric authentication interface than they had with the previous password system.
Answer
The statements resolving the discrepancy are the option explaining that cybercriminals shifted focus to high-value corporate accounts resulting in larger individual dollar losses, and the option demonstrating that an automated tracking protocol captured previously unrecorded fraud data.
The correct selections both provide plausible mechanisms that reconcile high biometric adoption with increased total monetary losses. The option regarding criminal strategic shift explains how average loss per incident grew significantly enough to raise total losses despite lower frequency among retail users. The option regarding new automated tracking explains that the apparent increase is a function of better data collection capturing previously hidden losses.
Step-by-Step Solution
Key Concept
Resolving Paradoxes: Aggregate Monetary Value vs. Incident Rate and Reporting Bias