The Analysis Comment
‘Business as usual’ for most consumers impacted by fraud
Lenders appear to be avoiding the blame for fraud events in the public’s perception
Jaclyn Holmes Director, Auriemma Research
In 2018, millions of consumers had their personal data compromised by breaches across a diverse set of industries – from technology to retail to hospitality and more – putting many at risk of payment-card fraud. Most consumers are aware of their
data’s exposure, but 91% believe their credit card issuer will cover them in the event of fraud. But
this confidence causes
consumers to put themselves in harm’s way, according to our most recent issue of The Payments Report.
Mainstream Fraud events have become mainstream, leading many consumers to feel numb to its consequences. According to Auriemma Roundtable’s Q4-2018 Card Fraud Benchmark Report, seven-in-10 financial institutions saw an increase in gross credit- card fraud compared to the prior quarter; a similar number of issuers are forecasting gross fraud will stay the same or increase in 2019. Meanwhile, nine-in-10 of consumers
believe fraud has stayed the same or increased over the past year, according to our data.
While a noteworthy 22% of these consumers say the experience has caused them to spend less on the impacted card, 15% spend more, and 63% have not changed their spending at all. In general, fraud events do not appear to
leave a lasting stain on payment behaviour with the compromised card.
some
Public opinion In the court of public opinion, banks do not appear to be to blame for fraud. But as fraud remains high industry-wide, issuers are now tasked with finding ways to further engage their customers in the fight, namely by reducing risky payment behavior and signing up for proactive protections. Consumers, however, are not demonstrably
Fact of life Many consumers have accepted fraud as a fact of life. They know fraud happens, many are concerned it will happen to them, but they are also confident that their issuers will take care of them. When asking consumers about how credit-card issuers respond to
fraud, we found over that eight-in-10 say issuers react quickly and are good at monitoring. Even the one-fifth who say they have expe- rienced card fraud in the past year share these positive sentiments.
June 2019
concerned it will happen to them, but they are also confident that their issuers will take care of them. When asking consumers about how credit-card issuers respond to fraud, we found over eight-in-10 say issuers react quickly and are good at monitoring
Many consumers have accepted fraud as a fact of life. They know fraud happens, many
are
concerned with proactive, preventative measures. Over one-quarter of cardholders are
comfortable making online purchases from unfamiliar websites, likely a direct result of the confidence consumers have in banks’ protective measures. In addition, over four-in-10 cardholders
say they have not changed the password for their debit or credit-card account in over a year. Other precautions, like fraud alerts, identity theft protection, and two-factor authentication are not overwhelming used by consumers.
Conclusion While issuers try to arm their customers with tools to defend against the impact of fraud,
many are not taking advantage. Consumer complacency could be a challenge in 2019 and beyond,
and if issuers are not able to enlist their cardholder’s support against fraudsters, we may see losses grow. CCR
www.CCRMagazine.com 11
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