A global study of more than 5,200 consumers across 17 countries conducted by ACI Worldwide and Aite Group, reveals that one-in-four respondents has been victimised by credit, debit or prepaid card fraud during the past five years. More than 20 per cent of respondents have reported that they will stop using or switch from the card impacted by fraudulent activity. The report also found that residents of Mexico and the United States reported the highest percentage of direct experience with card fraud at 44 and 42 per cent respectively. Residents of The Netherlands and Sweden tied for the lowest levels of fraud at 12 per cent.
“The results of this survey show that card fraud continues to be one of the greatest threats and concerns for consumers, financial institutions, and retailers,” says Mike Braatz, senior vice-president, payments fraud, ACI Worldwide.
He adds: “While there have been significant advances in fraud prevention technology, it is clear that more needs to be done to educate consumers about fraud and engage them as allies when it occurs. These results should serve as a call-to-action for financial institutions and retailers to remain constantly vigilant and earn the trust of customers by working with them to combat fraud.”
The 2012 Fraud Survey also found that:
Financial institutions risk losing customers due to fraud
• Attrition rates after experiencing card fraud average 21 per cent among cardholders,
• 46 per cent of cardholders, who received replacement cards as a result of a data breach or fraudulent activity in the past year, used the new card less than the original, and
• After experiencing fraud, more than 50 per cent of cardholders used cash or an alternate form of payment instead of their credit or debit card.
Consumers fear identity theft yet continue risky behaviour
• Identity theft replaced credit card fraud as the greatest concern from fraud exposure in the 2012 survey. 49 per cent of respondents indicated that they were very concerned about possible harm to their financial standing and rating, and
• Many consumers continue to exhibit risky behaviours that put them at higher risk of financial fraud. These include keeping written records of PIN numbers, throwing away unshredded documents containing sensitive information, and using computers without security software for Internet banking services and online shopping.
Consumers want to partner with banks for fraud prevention
• If their financial institution notices unusual activity on their bank account or card, 82 per cent of respondents are “very interested” in being notified prior to the bank taking action, and
• Consumers prefer immediate and direct communication from their banks when fraudulent activity is detected. The most preferred method of contact was found to be a call to the respondents’ mobile phone, followed closely by E-mail, and text message.
“The survey paints a compelling picture of the global nature and threat of fraud,” says Shirley Inscoe, senior analyst, Aite Group. “Financial institutions, issuers, and retailers need to enlist customers in the fight against fraud. There is a need to educate them on prevention best practices, and reassure them of policies should fraud occur. Maintaining customer satisfaction, loyalty, and preserving wallet share can be achieved by communicating with and enlisting the customer in the fight against fraud.
Copyright © 2013 Singapore Institute of Management