Consumer trust in banks wavers as card fraud rates rise

Almost one-in-four people have fallen victim to card fraud over the past five years, according to a study of 6100 consumers across 20 countries by ACI Worldwide and Aite.

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Consumer trust in banks wavers as card fraud rates rise

Editorial

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With 1367 confirmed data breaches in 2013 alone, the study finds consumer confidence wavering in the face of rising levels of online crime.

The ACI/Aite poll found that UAE. has the highest rate of fraud overall at 44%, followed by China at 42% and India and the United States at 41% each.

The increasing incidence of card fraud appears to be having a destabilising effect on consumer trust in financial organisations, with one-quarter of cardholders switching banks due to dissatisfaction after experiencing fraud. A further 63% of victims also reported that they are more likely to use their cards less.

Shirley Inscoe, senior analyst, Aite Group. "Consumers lack confidence in their bank's ability to protect them from fraud, so banks must remain vigilant in their fraud migration efforts or face increased customer attrition."

Visa Europe insists that investment in things such as chip and PIN and Verified by Visa has helped it drive fraud levels to a record low. Last year, the fraud to sales ratio on Visa cards was 0.045% Europe-wide, meaning that for every 100 euros spent, less than five cents was lost to crooks.

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Comments: (4)

A Finextra member 

Would be useful to have a further regional/country breakdown of the survey - helps identify local regulatory and bank practices wrt fraud protection and schemes. Can't really conclude much from this tbh - other than use cash next time I'm Abu Dhabi ;-)

Stephen Wilson

Stephen Wilson Managing Director at Lockstep Consulting

I'd also like to see the "card fraud" figures broekn out into carding (Card Present) versus Card Not Present. At one level, it's all "card fraud" insofar as illict charges are made against a cardholder account. But the vectors are different.  EMV brings carding down, but we need to know how much carding fraud then migrates to online CNP fraud, reion by region. 

A Finextra member 

@Marcus - Further breakdowns of card fraud by country are included in the report. Also data is compared within geos (EMEA, APAC, and Americas). A complimentary copy can be accessed in the link below. 

@Stephen - the survey did not break down the questions for the consumers into card present vs. card not present categories (something to think about for the next survey).  However, there were several questions related to relative confidence in e-commerce purchasing that will come out in Part II of the research (scheduled for mid-July from Aite). I know in many areas globally that CNP fraud went up after the implementation of EMV.   

http://www.aciworldwide.com/2014fraudsurvey.aspx

 

Steven Murdoch

Steven Murdoch Royal Society University Research Fellow at University College London

Thanks for sharing this report. I found it very interesting.

In the next survey, I'd really like to see which proportion of card fraud victims took a financial loss, how much this was, and whether it was a result of the bank refusing to refund them or due to other reasons. There are no good recent statistics here and it would address an important public policy question.

The current report gives customer satisfaction, which goes some way to addressing this issue (it's unlikely a customer will be very satisfied if they took a large financial loss), but it's hard to break down where dissatisfaction is coming from.

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