Abstract
Introduction
While data on fraud statistics are scarce, understanding consumer attitudes to fraud is an important tool in combating this potential threat. The findings in this study are based on a survey covering Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Russia, South Africa, South Korea, Singapore, Spain, Sweden, the UK, and the US.
Features And Benefits
• Understand global fraud levels and the levels of fear of fraud among victims and non-victims depending on the type of fraudulent activity.
• Gain an understanding into how consumers react in the aftermath of fraud and how they view the role of banks in terms of preventing fraud.
• Plan your fraud prevention strategy around best practice and emerging solutions that if implemented could be most effective in combating fraud.
Highlights
The growing online commerce channel is creating opportunities for fraudsters, generating concern among consumers about the security of payments. Card not present fraud is the most common type of fraud. Furthermore, 64.7% of consumers stated that having their card details stolen on the Internet causes them the greatest concern.
Given the magnitude of recent security breaches, educating customers and merchants is becoming as important to the issue of fraud as directly targeting compromised accounts. In order for banks to realize when fraud is taking place, they should know when consumers go abroad, whether they shop online, and how much they are likely to spend.
To accommodate some of the challenges of online banking, the industry is in the midst of moving from static to dynamic authentication. The technology is only now beginning to catch on for online commerce transactions. In the card not present environment, a mobile phone may yet prove to be the most viable secure verification tool.
Your Key Questions Answered
• What are global fraud levels in card present versus card not present environments?
• Which is the most common and feared type of fraud?
• How do consumers view the role of banks in preventing fraud?
• How accountable do consumers hold themselves for the incidences of fraud?
• What are best practice and emerging fraud prevention strategies?
Table of Contents
Executive Summary
The financial cost of fraud is only one part of the problem, the other being the potential loss of custom
Fighting online fraud should be a collaborative effort between consumers, merchants, and the card industry
Merchants have a responsibility to protect consumer data, which remain vulnerable to hacking attacks
Consumers need to be put in control of their finances and fraud prevention strategies
For banks, rebuilding consumer trust in the aftermath of fraud is important to the issue of security of payments
More regulation is expected to fight against online fraud
OVERVIEW
Catalyst
Summary
Table Of Contents
Contents of this report
Introduction
This report uses consumer insights to provide a complete understanding of fraud trends
THE FEAR AND INCIDENCE OF FRAUD INDICATE THE GROWING CONCERN IN THE ONLINE CHANNEL
Introduction
Over one in 10 have consumers had been compromised in the last three years globally
Globally, 16.6% of consumers have been compromised in the last three years
Online fraud is most widely experienced as well as being the most feared
Those consumers who have been a victim of fraud are more fearful of a repeated incident
CHANGES IN CONSUMER BEHAVIOR IS THE HIDDEN COST OF FRAUD
Introduction
The financial cost of fraud is only one part of the problem, the other being the potential loss of custom
On the whole, the majority of consumers reported that they kept the account after the incident of fraud
One in five consumers reported that they had closed their account in the aftermath of fraudulent activity
A significant proportion of consumers believe that banks are not doing enough to protect them against fraud
While the majority of consumers are taking precautions to safeguard themselves from fraud, those who remain negligent need to be educated
FIGHTING FRAUD SHOULD BE A COLLABORATIVE EFFORT
Introduction
Combating fraud requires compliance with data protection as well as secure payment methods
The US' s reluctance to implement an EMV migration plan indicates that phasing out the magnetic stripe is a long way off
The PCI DSS will remain in force but more merchant education is required
Some banks also lag behind in terms of card payment security
Fighting online fraud should be a collaborative effort between consumers, merchants, and the card industry
The growing risk of fraud in online commerce and payments is a major concern for the payment industry
More co-operation from consumers is required, rather than shifting liability outright
Consumers remain vulnerable when conducting their business and transactions online
Banks are trying to raise awareness of card present fraud through marketing initiatives
There has to be a balance between customer experience and education in fighting fraud
More communication and education about security is relevant to the issue of combating online fraud
There are several options for banks that require some consumer involvement
The industry is in the midst of moving from static to dynamic passcodes, to improve the security of payments
The number of card readers used for online banking has grown significantly, but consumer reaction has been mixed
Dynamic authentication in the card not present environment is beginning to be rolled out by banks
Mobile phones may well prove to be the most viable secure verification application of the future
Mobile phones are being considered as part of a geolocation-based transaction verification solution
Biometrics are a long way off being implemented but the advancements are gaining pace
Biometric technology is increasingly being considered in both government and banking environments
The industry needs to consider the maintenance of such databases and foreseeable consumer adoption levels
Momentum appears to be building, with mobile phones being integrated with biometric technology
Alternative payment methods are favored among customers and merchants because they are perceived to be more secure
Consumers perceive online third-party payment providers to be straightforward and more secure payment methods
More bank transfer-based online payment services are being introduced in place of payment cards
Appendix
Supplementary data
Definitions
Realtime scoring
Chargebacks
Credit card
CVV
Debit card
PCI DSS
Point-of-sale (POS) terminal
Prepaid card
Stored value card
Zero liability
Methodology
Further reading
Selected Bibliography
Ask the analyst
Datamonitor consulting
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