Most consumers expect their banks to be proactive when it comes to fraud. Further, they do not want to be burdened with monitoring their bank accounts for suspicious activity. In fact, most consumers believe that is a bank’s job. Banks, for the most part, understand their role in preventing fraud. Yet, they risk losing consumers if they do not act when credit card fraud occurs and to prevent it from happening.
Banks are generally aware of their role in protecting consumers from credit card fraud. But they need to take measures to monitor particularly high dollar amounts of fraud.
These are just some of the findings detailed in “Consumer Credit Economy: Credit Card Fraud,” a PYMNTS Intelligence and i2c collaboration. This report examines the impact of credit card fraud on consumers and their relationships with their banks. This edition draws on insights from a census-balanced survey of 2,158 U.S. consumers conducted from Aug. 1 to Aug. 19.
Key Findings
Credit card fraud has hit 28% of consumers, and 37% of consumers say they are very or extremely worried about it.
Credit card fraud is a growing concern for consumers. In fact, 28% have already been victims of it in the last year. The prospect of bad actors having access to one’s credit card is a concern for many consumers. Our data reveals that 37% say they are highly worried about credit card fraud. Overall, 72% of consumers indicate they are at least somewhat worried about it.
The consumers in the midst of building their families and their careers are the most concerned. Among millennials, 41% report being highly concerned with credit card fraud. Bridge millennials and Generation X consumers follow closely behind, with 40% of each generation saying the same.
Consumers living paycheck to paycheck are also highly concerned with credit card fraud. Among consumers living paycheck to paycheck, 43% of those with issues paying bills are highly concerned. While credit card fraud is an unwelcome issue for any consumer, those stretched financially have the most worries about it.
Rates of credit card fraud in the last year were high across all ages, impacting 28% overall. The consumers most likely to have experienced credit card fraud were millennials, high-income earners and Generation Z. Bridge millennials, at 34%, and millennials, at 33%, were the most likely to have experienced credit card fraud. Consumers earning more than $100,000 per year followed, also at 33%. High-income earners tend to have more cards than lower-income consumers, so it makes sense they would be highly impacted. Gen Z consumers trailed behind, at 31%, possibly because they are less likely to have cards in the first place.
When banks take direct measures to counter credit card fraud, consumers are the most satisfied.
Rapid action is required to thwart credit card fraud. Fortunately for most consumers, banks proactively take steps once credit card fraud has been detected. A lack of vigilance by the bank can result in a financial loss for the consumer if the fraud goes undetected. Consumers, in fact, are often the last to find out about fraud on their cards. Overall, 91% say that their bank intervened in the fraud before they had to do anything. Further, 28% of consumers learned about a fraudulent charge only through a mobile notification. Another 26% of consumers learned about fraud through their bank statement. Just 8.4% report that their bank did not take any type of proactive action on their fraudulent charges. The data suggests that banks largely take ownership of fraud alerts upon detection.
Fortunately for banks, they can maintain customer satisfaction by acting swiftly. Consumers report being most satisfied when their bank alerts them before they realize a fraudulent charge has occurred. Ninety percent of victims whose banks took proactive measures report being very or extremely satisfied with how the situation was handled. This compared to 50% of those who discovered the fraud on their own.
Consumers expect banks to combat fraud. They do not want to take on the responsibility of monitoring their own accounts.
Most consumers believe that banks and credit card networks have the responsibility to prevent and resolve fraudulent activity. According to consumers, 82% say banks are responsible for credit card fraud resolution. In addition, 75% say banks hold the responsibility for preventing fraud in the first place. For credit card networks, 80% of consumers think networks are responsible for resolving fraud. Further, 75% believe networks are responsible in preventing card fraud. The data is clear. Consumers believe those that they entrust — and pay — to take care of their accounts should actively combat and resolve fraud.
Most consumers believe banks and credit card networks should monitor their accounts for suspicious activity in real time. While 70% of consumers said banks and networks should take this action, 33% say it is the most important action these entities should take. Consumers are less likely to think that measures allowing them to monitor their own accounts are the way to go. These could include consumers setting up alerts on their own accounts or geolocations that allow consumers to see where a transaction was made.
Consumers prefer to take less drastic action when credit card fraud occurs, but they may switch cards — or their bank.
Experiencing credit card fraud can propel consumers to act. Requesting a new credit card from the same bank is the most popular action consumers take. Forty-two percent of consumers opt to do so once fraud has occurred. A much lower share of consumers, 17%, canceled their credit card altogether. Taking other drastic actions, such as switching to another bank, are rare. For example, just 5.2% of consumers switched banks after they were victims of credit card fraud.
What causes the consumers who switch banks to do so? Banks need to pay special attention to higher dollar amount fraud. On average, consumers who switched banks lost more money than consumers who took less drastic actions. For example, those who switched banks lost an average of $475 in comparison to the $287 lost by those who put a freeze on their card — a $188 difference.
Banks should also understand that the consumers most concerned about fraud are more likely to take drastic actions. When fraud happens to these consumers, they react. Among consumers who are very or extremely concerned about fraud, 23% would switch to a new bank if they experienced fraud.
Conclusion
Consumers have valid reasons to be wary of fraud — 28% experienced it in the past year. Consumers expect banks to play a proactive role in preventing and resolving fraud. When consumers feel their bank is not working with them, they are more likely to make big changes, such as switching banks. Anxiety about fraud has a role to play in this. Consumers who are most worried about fraud would be among the first to move to a new bank.
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Methodology
“Consumer Credit Economy: Credit Card Fraud,” a PYMNTS Intelligence and i2c collaboration, is based on a survey of 2,158 U.S. consumers conducted from Aug. 1 to Aug. 19. The report examines the effects of credit card fraud on consumers and their relationships to their banks.
