What happens, though, if you can’t remember which bank refinanced the loan on your first home? Or what if wrong information on some database causes you to answer a given question incorrectly? Authentication firms say that it’s up to their clients — the banks or credit-card companies — to build in some kind of tolerance for wrong answers.

Out-of-wallet authentication may inadvertently make some kinds of identity theft easier. Because it dramatically increases the value of the data held in credit bureaus and databases, it is more tempting for employees of these organizations to pilfer the data.

Seattle-based ex-con Ronald Hemphill told Newsweek that he once paid more than 60 people with insider database access in many organisations to send him information on (usually wealthy) individuals he chose to impersonate; a complete profile of a target cost less than $1,000. His fraud ring rapidly flipped through the profiles during out-of-wallet tests, routinely defeating them.

—Newsweek / BENJAMIN SUTHERLAND