Consumer trust threatened by fraud
by. Bethan Cowper
Payment fraud is on the rise. This is not surprising considering the more recent adoption and increasing proliferation of new and alternative payment channels in the market. It is basic mathematics; the more channels available, the more opportunities available to fraudsters, just as the increase in fraudulent transactions is relative to increases in transaction volumes.
The cost of fraud is far-reaching and not just confined to the immediate financial implications. One of the key costs is the loss of consumer loyalty and subsequent loss of customers. According to Gallup’s 2012 report, Confidence in Banks, consumer confidence in U.S. banks hit a record low of 21 percent that year and reached just 26 percent in 2013. This tenuous relationship with financial institutions is only made more precarious by the number of consumers willing to change institutions once they have become a victim of payment fraud. According to a new Entersekt poll, 71 percent of Americans would be at least somewhat likely to switch banks if they became a victim of online banking fraud.
Fraud is a popular topic and one that makes headlines on a regular basis. With consumers so willing to change where they bank, how can credit unions quell the fears of their members, build trust and maintain loyalty across all banking channels?
The first step to building consumer trust is through education. Credit unions need to make their members aware of the types of fraud out there and how their credit union is working to protect them. The next step is to give members control of their fraud prevention strategies; alongside education, members should be made aware that they, themselves, can also significantly reduce their risk of fraud. A recent survey carried out by Visa revealed that more than 58 percent of consumers surveyed admitted to sharing personal details over social media that could put them at risk for fraud and identity theft.
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