Consumer Concerns About Identity Theft & Credit Card Fraud Declining, says Auriemma Consulting Group

A Perception That Banks, Merchants, Websites, and Government Already Help Keep Personal Data "Very Secure"

NEW YORK, NY:  Identity theft and credit card fraud has become a global industry, and while a majority (64%) of U.S. consumers still see identity theft as a growing problem, the incidence who agree that identity theft is “increasing” has actually been trending downwards for the last few years (down from 72% in 2007, to 70% in 2009, to just 64% currently) according to the latest research from Cardbeat®, a syndicated research report published by the Auriemma Consulting Group (ACG).

Just over one-third of all respondents have never experienced any fraudulent activity on their credit cards or been notified by a bank, merchant, or other institution (37% and 36%, respectively) that their personal information may have been compromised.  Yet, even among those who actually were victims of fraudulent activity, most (67%) said they were actually made aware of the possible security breach by their financial institution.  Also, respondents who have actually experienced fraudulent activity on their credit cards continue to show extremely high levels of satisfaction with their credit card issuers in handling the situation – almost all (92%) report being satisfied with the outcome, while 73% of victims report satisfaction with merchant involvement in rectifying fraudulent activity – statistically unchanged from the Cardbeat results when this topic was previously examined in 2009.

At the same time, the incidence for almost all actions consumers can take to help protect their personal information has actually declined since Cardbeat first began looking at it in 2007.  For example, while not giving credit card information to people over the telephone (77%) or via mail (68%) are both commonly mentioned prevention methods, the prevalence of both measures has actually declined since December 2009 and December 2007.

Dr. Patricia Sahm, Managing Director at ACG, says that credit card issuers’ own skill and dexterity in managing credit card fraud may be a contributing factor behind consumers taking less active roles in protecting their own personal information today.  “In effect, the banks have become victims of their own success in effectively managing the issue of credit card fraud.”  She cites increases in "false alarms" or occasions where banks or merchants notify customers about a potential security breach, yet no problems actually occur on customers’ accounts.  In a way, the industry’s competence in managing the issue has created a sense that financial institutions and credit card companies already have effective security measures in place and will respond appropriately to any breaches in security so consumers don’t need to be as careful as they perhaps did a number of years ago.

However, she also sees a tremendous opportunity for financial institutions, retailers, and even government agencies to help educate consumers about the risks of not ensuring that their personal information remains confidential, particularly among younger consumers who may have less personal exposure to the difficulty in trying to recover from identity theft.  Our view is that increasing public service announcements and bank communications about taking steps to safeguard personal financial information might be a valuable investment.  She says, “We should keep in mind that the Facebook generation doesn’t seem to have the same concerns about sharing their personal information, and this may also extend to their financial lives as well.”  The benefits of such public service announcements are not limited to banks.  After all, costs associated with identity theft are typically incurred by both banks and retailers, so the benefits of promoting ways to protect consumer identities may also be shared.

About Auriemma Consulting Group

Auriemma Consulting Group (ACG) is a full-service management consulting firm serving the payments, lending, and retail industries since 1984.  Cardbeat is ACG’s syndicated market research study of credit cardholders, conducted monthly in the U.S. and quarterly in the U.K.  ACG also conducts research in the debit and prepaid space, and publishes a quarterly report known as The Payments Report.  With offices in New York and London, ACG consultants are experienced practitioners drawn from the credit card, private label, auto finance, mortgage, and retail banking industries that we serve.  For more information, please contact Dr. Patricia A. Sahm at 212-323-7000 or patricia.sahm@acg.net.

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