In 2018, millions of consumers had their personal data compromised by breaches across a diverse set of industries—from tech 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 some consumers to put themselves in harm’s way, according to Auriemma Research’s most recent issue of The Payments Report.
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-ten 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-ten consumers believe fraud has stayed the same or increased over the past year, according to Auriemma Research data.
“Many consumers have accepted fraud as a fact of life,” says Jaclyn Holmes, Director of Auriemma Research. “They know fraud happens, many are concerned it will happen to them, but they’re also confident that their issuers will take care of them.”
When asking consumers about how credit card issuers respond to fraud, Auriemma Research found over eight-in-ten say issuers react quickly and are good at monitoring. Even the one-fifth who say they’ve experienced card fraud in the past year share these positive sentiments. 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% don’t change their spending at all. In general, fraud events don’t appear to leave a lasting stain on payment behavior with the compromised card.
“In the court of public opinion, banks don’t appear to be to blame for fraud,” says Holmes. “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 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-ten cardholders say they haven’t 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.
“While issuers try to arm their customers with tools to defend against the impact of fraud, many aren’t taking advantage,” says Holmes. “Consumer complacency could be a challenge in 2019 and beyond, and if issuers aren’t able to enlist their cardholder’s support against fraudsters, we may see losses grow.”
This Auriemma Research study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group among 800 US adult debit cardholders in March 2018. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 25 minutes. For more information, call Jaclyn Holmes at (212) 323-7000.
About Auriemma Fraud Control Roundtables
Auriemma runs a series of information sharing and benchmarking groups for executives in fraud strategy and operations. Spanning credit card, debit card, and consumer banking, Auriemma’s fraud control roundtables combine executive meetings, industry-leading operational benchmarking, and peer group surveys to help participants identify vulnerabilities and optimize fraud management strategies. For information on membership, contact Ira Goldman at 212-323-7000.
About Auriemma Group
For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, visit us at www.auriemma.group.