A new survey of consumer perceptions of fraud risks is not all bad news for beleaguered retailers. It suggests that despite highly publicised data breaches, consumer confidence in businesses’ ability to protect data has risen since 2014 – but from a very low level.
The survey of 6,035 consumers in 20 countries was sponsored by electronics company ACI Worldwide and follows a similar study in 2014. Conducted in the second quarter of 2016 by the research and advisory firm Aite Group, its findings were released this week.
Among the findings:
- Consumer confidence in merchants’/retailers’ ability to protect personal information increased to 43% in 2016 from 34% in 2014, among the 17 countries surveyed in both studies.
- Sixty-five percent of consumers indicated they would stop shopping with a given merchant after experiencing fraud or a data breach. The U.S. was the only country surveyed where less than half of consumers would stop shopping at such a merchant. In the UK, the figure was 56%.
- Consumers are generally not confident in businesses’ ability to protect their stored data. Only in the U.S., India, and Thailand did consumers report at least 50% confidence that their stored data was well-protected.
- Across all regions, the number one fraud concern is theft by computer hacking.
- Consumers are generally willing to interact with organizations to mitigate fraud, and mobile is the primary channel, either voice or electronic, through which they wish to engage.
Although European countries generally have stronger data protection laws than the US, the ACI survey found most European respondents less positive than Americans about firms’ (eg stores, online merchants, and restaurants) ability to protect personal data. Confidence on this score was highest in the UK and Spain, at 49%, and lowest in Germany at 30%, (despite Germany’s stringent laws).
In most countries consumers saw banks as better data protectors than retailers. This perception was least marked in European countries outside the Eurozone, such as the UK and Sweden.
Respondents were asked to rate which of the following – theft by computer hackers, paper forms, shopping online, giving card details over the phone, theft by trusted third parties (eg restaurant staff), and shopping using a mobile or tablet – presented the greatest fraud risk.
Between 21% and 45% of consumers in all regions said theft by computer hackers was the greatest fraud risk, between 10% and 20% cited paper forms, 10% to 20% cited online shopping and only around 5% saw shopping with a mobile or tablet as the greatest risk. In general consumers in more developed countries were not accustomed to shopping with a mobile or tablet, which might have affected their perception of the risk.
Jay Floyd, Head of Fraud Strategy and Solutions EMEA, at ACI Worldwide commented:
““The findings should serve as a wake-up call to the industry to better educate consumers and to highlight security measures that are in place. Consumers on the other hand must become more proactive in securing their data and make use of the fraud prevention measures and services offered by their banks.
“Most financial institutions and businesses worldwide have invested considerably in sophisticated fraud monitoring and prevention solutions; however, fraudsters also invest considerably. They continually find new ways of attacking IT systems and thereby collecting and monetising confidential data.”
Other findings from the report suggest underused opportunities for reducing fraud.
Fraud Education: Consumer education on fraud awareness varies significantly across and within regions. In the UK, only 39 percent of respondents to the survey said they had received anti-fraud information from their bank. Across Europe, the picture is similar with at least one-third of consumers saying they did not recall receiving any anti-fraud information.
Fraud Prevention: Consumers are generally willing to interact with organisations in order to mitigate fraud. The majority of UK respondents (55 percent) said they preferred to be contacted by a bank via mobile phone if there was unusual activity on a bank account or card.
Shirley Inscoe, Senior Analyst, Aite Group commented:
“Our research shows that consumers want to proactively manage fraud, particularly by leveraging mobile technology – whether it’s text or talk. This willingness opens opportunities for financial institutions and merchants to optimise the ways in which they reach out and communicate with consumers, ultimately improving customer experience while reducing operational costs and fraud losses.”