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Credit Card Fraud Up 62% Since 2009

One-third of consumers have experienced credit or debit card fraud in the past five years, according to an ACI Worldwide survey of 4,200 people.
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In the past five years, 29% of financial services customers worldwide who use credit or debit cards have experienced card fraud. That's an increase from the summer of 2009, when just 18% of customers reported being a victim of card fraud.

That increase is a key finding of a new study, commissioned by ACI Worldwide, an electronic payment software developer, and conducted by Research Now, which surveyed 4,200 people in North America, Europe, and Asia, as well as Dubai and Brazil, in December 2010.

Levels of card fraud vary widely by region. Over the past five years, for example, card fraud hit 43% of consumers in China, 32% in the United States, and only 11% in the Netherlands. (Rates in the Netherlands are so low because like most of Europe, Dutch credit and debit cards feature EMV card security -- also known as "chip and PIN" -- to cryptographically protect cards when used for point-of-sales purchases.) But despite the global increase in card fraud, 79% of card-fraud victims in 2010 -- up from 75% in 2009 -- were satisfied with their financial institution's response.

Consumers in general also think that their banks are doing a good job of protecting them against fraud. In the United States, for example, just 12% of consumers think that their bank could be doing more, while 19% of people globally say the same thing. But 29% of consumers in Brazil and 42% in China aren't confident in their financial institution's ability to protect them against fraud.

What accounts for different countries' differing levels of customer satisfaction? Speaking about the survey results, Jasbir Anand, lead solutions consultant at ACI Worldwide, said in an interview that customer satisfaction is relatively high in countries that are "banked" -- meaning that consumers "use bank accounts and card payments as the primary vehicle for their card transacting," and where banks are also relatively good at spotting fraud. Compare that to relatively "unbanked" countries, such as China, where most people use cash for the majority of their purchases, and where satisfaction with financial services firms -- which may also have less experience spotting fraud -- is correspondingly lower.

Globally, the two other biggest predictors of consumer satisfaction are the speed with which banks notify customers of suspected fraud, and how quickly they restore affected funds. In the United States, 40% of consumers said notification speed was their number-one fraud concern, while 32% prioritized fund-restoration speed.

For receiving fraud notifications quickly, the survey also found that about half of all respondents globally prefer to be contacted on their cell phone, either by a call or a text message. But from a security standpoint, Anand warned that such notifications -- while useful -- could be a double-edged sword. "It opens up more opportunities for fraudsters to themselves contact customers and engage in social engineering attacks," he said. "By piggybacking onto an existing process used by the financial services organization, they can now try and steal more information from customers."

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