MIAMI, Fla. - The bad news: credit card fraud is still a problem. The good news: it’s down slightly and actually offers some marketing opportunities, according to one expert.
The incidence of fraud among new accounts has gone down in the past 12 months, according to Bruce Condiff, director of Javelin Strategy & Research, who spoke at SourceMedia’s 20thAnnual Card Forum & Expo here.
In 2006, the rate was 1.52%. In 2007, it was 1.05%. This caused an annual cost of $24.2 billion in 2006, and $17.9 billion in 2007. However, in existing accounts the number rose from 2.48% in 2006 to 2.69% in 2007.
Credit Cards Are The Most Targeted
Credit cards are the most targeted when it comes to new account fraud, Condiff said (see related chart). For this reason, many consumers are monitoring their credit, Condiff said.
“Consumers want convenient web-based access to their credit reports,” he said. “They want easy online access to credit information. One out of four buy from issuers, but 40% are credit monitoring for free.”
Other than credit monitoring, other identity fraud prevention services are fraud alert and credit freeze. In a survey Javelin conducting asking consumers what service they would most likely use, 25% answered they would use a credit monitoring service, 20% answered they would use identity theft insurance, and 16% would security freeze to prevent any granting of credit. Eighteen percent of credit consumers have used identity theft insurance, and one-third believe it should be provided by their financial institution.
One out of four victims of fraud purchase credit monitoring, Condiff said.
Behavioral Changes
“Consumer behavior changes after fraud victimization,” Condiff said.
One may avoid online registration requiring personal information after being a victim of fraud, or may monitor their accounts more often.
Other behavioral changes may include: avoiding online purchases, avoiding online banking, avoiding certain merchants, switching forms of payment, spending less money, purchasing credit-monitoring services, turning off delivery of paper statements or bills, or switching financial institutions.
