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Global Fraud Report: Consumers Frustrated With Financial Institutions

The newly released 2014 ACI Global Fraud Survey (links at bottom) paints a dramatic picture of the global debit/credit card fraud picture – raising a litany of concerns for consumers and financial institutions.

Trust? In line with the study’s name and the different behavioral and fraud levels around the world, trust remains a huge issue regarding consumers’ trust of financial institution to protect their sensitive information and handling acts of fraud. Similarly, The study also reveals how consumers are eager to do their part in the fight against fraud and the measures financial institutions should take in informing their consumers about fraudulent behavior.

44% of US customer have never received information about ways to combat fraud from their financial institution

Surprisingly, the study reveals that between 52% and 62% of individuals residing within the North and Latin America. are confident that financial institutions will be able to adequately shield them from accounts of fraudulent behavior. Furthermore, certain regions in Latin America remain unconvinced that they are being sufficiently protected by their financial counterparts. For example, roughly 18% of individuals residing in Brazil believe that financial institutions could take more steps to protect individuals from fraud, while only 8% of individuals in the United States believe that these institutions could implement additional safeguards. Likewise, in Mexico, 9% believed that financial institutions can’t do much to protect consumers from fraud, whereas in the United States only 3% believed the same. To explain this remarkable gap, the study notes that the statistical discrepancies between regions can be attributed to differing statutes that hold financial institutions liable for fraudulent acts.

Furthermore, while many in the United States are concerned with fraud regarding their credit cards, debit cards, and bank accounts, whereas those residing in Latin America are emphatically concerned with fraud. For example, while only 35% of individuals living in the United States are concerned with fraud on their debit card, approximately 82% of Mexicans are concerned with this type of fraud. Another category reveals that those in the United States are noticeably less concerned with credit card fraud than Brazilians are (with an alarmingly 69% of Brazilians being concerned with this instance of fraud, while only 39% of those in the United States are concerned with the same type of fraud).

Additionally, it has also been reported that a large majority of those living in Latin American countries and up to 44% of those residing in the United States have never received information about ways to combat fraud from their financial institution. Campaigns to prevent fraud, not only serve to educate consumers about the dangers of fraud, but can also be a successful deterrent against fraud in the future as consumers are more cognizant of suspicious activity. It has also been found that consumers, particularly those in Brazil and Mexico, wish to respond to any suspicious activities on their accounts before other transactions are allowed. Respectively, 87% of Mexicans and 88% of Brazilians would like all transactions to be halted until they are able to respond to any notifications from their financial institution. Similarly, 63% of those residing in the United States want their transactions to be frozen until they can respond.

Almost all consumers, regardless of their country, wish to be notified of suspicious behavior through a variety of different mediums. Across North and Latin America, cellphones, landlines, and emails were the preferred method of contact. In the United States, text messages weren’t a popular option at just 38%, whereas Mexicans and Brazilians favored them greatly at 69% and 62% respectively. Physical mail was the least popular option, with it being the highest in the United States at 28%.

In concluding the study, several recommendations were given to both financial institutions and retailers to help combat fraud.

  • First the study recommended that institutions provide information to educate consumers about the dangers of fraud and how they can help prevent it.
  • Secondly, they highlight the need for effective and efficient means of communication with consumers. Essentially, the study suggests that they notify consumers of how their cards protect them from fraudulent behavior, and how to respond to notifications about fraudulent behavior in a timely fashion. In the same vein, it’s also suggested that these institutions provide different methods of being notified about suspicious activity, such as text messages, e-mails, or even phone calls.
  • The study also advised retailers to take action by implementing better methods of encryption such as the use of public and private tokens to ensure that sensitive data is safeguarded from cyber-attacks.
  • In conjunction with the recommendations given to financial institutions, the survey recommended that retailers communicate with their patrons about how they are protecting their data from theft.

To view part one of the study, please click here.

To view part two of the study, please click here.

If you believe the financial institution or retailer you work for may benefit from suggestions in this study, please contact us at info@SmartedgeLawGroup.com or (203) 307-2665

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The Author

John Pritsiolas

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