As public concern about identity theft and fraud continues to escalate, it has become more critical than ever for financial institutions to step up customer protection efforts — or risk taking a hit to their bottom lines.
In a global study across 17 countries that included more than 5,200 consumers, some 25 percent of respondents said they’d been victims of credit, debit, or pre-paid card fraud within the past five years. Most tellingly, more than 20 percent reported that they will stop using, or switch from, the card impacted by fraudulent activity. The study — conducted by ACI Worldwide and Aite Group — further found that after experiencing fraud, more than half of cardholders switched to using cash or an alternate form of payment instead of their credit or debit card.
So what steps should banks take in protecting customers from fraud?
Customer detection remains key to limiting fraud damage, so it’s important for banks to make sure their clients are on the lookout for fraudulent activity. The best place to start is by having customers regularly monitor their credit card and banking statements for transactions and expenditures that look suspect.
While this advice might sound simple, it’s too often overlooked. So financial institutions should consider using a variety of communications tools — email messages, email newsletters, social media, and print brochures — to reinforce their anti-fraud messaging and to raise awareness about the fraud protection services they offer.
Other key recommendations to help customers avoid identity theft in the first place:
• Safeguard PINs (never write a PIN for a credit/debit card on a piece of paper and store it in a wallet or purse)
• Be vigilant about changing account passwords each month
• Beware suspicious e-mails: Phishers will use spam or pop-ups to look like legitimate banks or businesses in order to get personal information — which can then be used to access accounts
Of course, customers don’t want to go it alone, so it’s important for banks to be on the front lines of fraud detection and prevention. Some steps are relatively easy to take. Many banks, for instance, will automatically log customers out of online banking after 15 minutes of inactivity; mobile applications (smartphones, iPads, etc.) should have a shorter window of inactivity — say five minutes. Customers also appreciate banks that provide security alerts (in the form of automatic text messaging and email alerts) whenever the bank has been given instructions to change the customer’s account, including: address, email, or phone number changes; a PIN change; or a request for an additional or replacement ATM/check card or credit card.
Customers prefer quick and direct communication from their banks when fraudulent activity is detected, according to the ACI Worldwide/Aite Group global study. The method of contact that’s most preferred? A call to the respondent’s mobile phone, followed closely by email or text message. (This marks a change from the group’s 2011 study, when contact via home phone was the second most preferred method.)
In the fight against fraud, financial institutions that offer identity protection are finding this service to be increasingly popular. The best such services search daily to detect changes in credit reports to flag new accounts (like a credit card or car loan) that have been opened in the consumer’s name and then follow up with an immediate alert to the customer. Many services even take the extra steps of monitoring online chat rooms where data thieves sell personal information.
When customers do spot suspicious activity, they need to know who to call. Banks should make it easy to report fraud concerns, and should offer “live” one-on-one service providers who are available to field calls and quickly take follow-up action.
Preventing account-related fraud can save millions for financial institutions, so it’s vital to mount effective — and broad-ranging — customer protection efforts. To find out more, visit our website.