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Aite Group

29% of Consumers Don’t Trust Retailers With Securing Their Data

Global Consumers: Concerned and Willing to Engage in the Battle Against Fraud,” is the second in a two-part series conducted by ACI Worldwide and Aite Group. Among other findings, only slightly more than 50% of consumers feel stores where they shop use security systems that adequately protect their financial data against hackers and data breaches

  • 29% do not trust retailers (e.g., stores, online shopping sites, restaurants, etc.) to protect stored personal and financial data against hacking attempts and data breaches.    
  • 58% think financial institutions (large multinational institutions, community banks and credit unions) do a better job of protecting their data than do retailers, or for that matter, government agencies and law enforcement.  
  • Only 55% feel stores where they shop use security systems that adequately protect their financial data against hackers and data breaches, compared to 62% who believe that online shopping websites adequately protect this information.  

Mobile Customer Engagement

  • 77% are “very interested” in being contacted about suspicious activity on their cards or accounts via a phone call, email or text message.  
  • 73% prefer that their banks not post transactions to their cards until they respond to fraud alerts. 

Consumer Awareness

  • 42% do not recall receiving any anti-fraud information from their financial institution.
  • 32% think theft by a computer hacker is the greatest fraud risk. 

Prepaid Card Implications

  • In many countries, prepaid card usage and the rate of fraud on such cards correlates. China and India have the highest rates of prepaid card fraud at 17% and 18%, respectively, and very high consumer use rates at 93% and 91%, respectively. 
  • Conversely, in countries with use rates of 70% or less, such as Australia, Canada, New Zealand and the United States, fraud rates are 4% or less, indicating that the fraud rate may rise as more consumers use prepaid cards.  

Consumer distrust is exacerbated by the widely publicized retail data breaches over the past year,” Mike Braatz, senior vice president, Payments Risk Management Solutions, ACI Worldwide.

Retailers have their work cut out for them – to change consumer perception that shopping, be it online or in-store, is unsafe,” Mike Braatz, senior vice president, Payments Risk Management Solutions, ACI Worldwide.

Consumers want to engage in the battle against fraud. Financial institutions must take a proactive role in not only engaging customers in fraud-alerting activities, but educating them on preventative measures to take to most effectively combat it,” Shirley Inscoe, analyst, Aite Group. 

Communication is key when it comes to financial institutions making customers aware of the tools available to fight fraud. This can have a big impact in customer satisfaction and loyalty,” Shirley Inscoe, senior analyst, Aite Group. 

One in four consumers are victims of card fraud – new study reveals

A global study of more than 5,200 consumers across 17 countries conducted by ACI Worldwide and Aite Group has revealed that one-in-four respondents has been victimised by credit, debit or pre-paid card fraud during the past five years.

More than 20% respondents reporting that they will stop using, or switch from, the card impacted by fraudulent activity.

The report also found the top two countries affected by credit fraud were

  1. Mexico with 44% of residents affected
  2. 42% of United States

The countries with the lowest levels of fraud were The Netherlands and Sweden with fraud at 12%

“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,” said Mike Braatz, Senior Vice President, Payments Fraud, ACI Worldwide. “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% among cardholders.
  • Of cardholders who received replacement cards as a result of a data breach or fraudulent activity in the past year, 46% used the new card less than the original.
  • After experiencing fraud, more than 50% 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, with 49% of respondents indicating they were very concerned about possible harm to their financial standing and rating.
  • Many consumers continue to exhibit risky behaviours that put them at higher risk of financial fraud, including keeping written records of PIN numbers, throwing un-shredded documents containing sensitive information into trash bins and using public computers or computers without security software for Internet banking services and to shop online.

Consumers want to partner with banks for fraud prevention

  • If their financial institution notices unusual activity on their bank account or card, 82% of respondents are “very interested” in being notified prior to the bank taking action.
  • 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 or text message.  This illustrates a change from 2011 where contact via home phone was the second most preferred method.

“The 2012 Fraud survey paints a compelling picture of the global nature and threat of fraud,” said Shirley Inscoe, Senior Analyst, Aite Group.  “Financial institutions, issuers and retailers need to enlist customers in the fight against fraud, 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”.

The ACI press release can be found here.

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