Influencing long-term consumer behavior post-branch

It’s not unusual for a national crisis or high-profile incident to change consumer behavior. The recent merchant data breaches are no different. According to at least one study, more than one in five people have changed their shopping behaviors following the breaches that hit Target, Neiman Marcus and Michael’s. Namely, these consumers started using cash more often and stopped shopping at affected stores.

Although these behaviors have been classified as knee-jerk and short-lived, there are other consumer behaviors that card-issuing credit unions should encourage for the long term. These include becoming more educated on fraud risks and opting-in for fraud prevention tools offered by the credit union.

Helping cardholders spot trouble before it impacts them is incredibly valuable, not only for the individual, but also for the credit union. The overabundance of communication vehicles available to credit unions today makes it easier to share a large amount of information quickly and broadly. When researching content for blogs, social channels, newsletters, emails, statement stuffers and more, consider fraud-focused tips and advice.

Encouraging consumers to get involved in education can be a great community-building activity, as well. Crowdsource your educational content by asking cardholders to send in screenshots of phishing emails.  Host regular educational sessions, at the branch, a local coffee house or even online as a webinar or Tweetup, where consumers share stories and provide their own warnings under the moderation of an expert from your credit union.

In addition to educating members on what to look for, teach them how to respond if they come across a red flag on their account or if they stumble upon a phishing email or tampered terminal. Local law enforcement wants to know when these crimes are being perpetrated on the community so they can better investigate the scope of the situation and more quickly capture the bad guys. Federal authorities, as well, need consumer-generated intelligence to help pinpoint the source of malicious software and the activity of counterfeiting crime rings.

Offering consumer-facing fraud prevention tools can also have a positive impact on the minimization of losses. Whereas consumers’ stolen information was misused for an average of 95 days in 2010, that timeframe had been nearly cut in half (to 48 days) by 2012. This may be attributed to a faster response triggered by heavier consumer involvement. According to Javelin Strategy & Research, more than 50 percent of fraud victims in 2012 actively detected fraud using financial alerts, credit monitoring or identity protection services and by monitoring their accounts.

Fraud text alerts are among those tools assisting members and credit unions in the identification of fraud and in the reduction of the unnecessary inconvenience generated by false positives. Triggered by a credit union’s own unique fraud prevention strategies, fraud text alerts are customized to an individual credit union’s existing program. If a particular transaction is flagged as risky, human fraud analysts take a look at the transaction in the context of the account and the existing strategies, and if warranted, verify the transaction by texting the cardholder.

Thanks to the alerts’ two-way communication feature, a compromised account can be shut down immediately upon verification of fraud from the cardholder. With some other consumer-facing fraud prevention tools, the cardholder has to call in to speak with a representative, who then must investigate before taking action. This can take up to several hours, leaving the account open to more fraud.

Renée Sanders, who manages nearly 100,000 credit and debit cards for Purdue Federal Credit Union in Indiana, said fraud text alerts have gained popularity since the $786 million credit union first introduced them. The jump in enrollment has spiked even higher since news of the Target, Neiman Marcus and Michael’s data breaches, Sanders said.

Sanders advocates for aggressive promotion of opt-in fraud tools, as she has seen marketing have a dramatic impact on enrollment. In October 2013, her team pushed out its “Layer Your Alerts” campaign, and enrollment in fraud text alerts more than tripled as compared to the previous two months. After the Target breach and another proactive promotion of alerts by the credit union, members enrolled at a rate nearly 30 times higher than an average month.

Attrition rates after experiencing card fraud average 21 percent among cardholders. Therefore, it’s important to manage perception of your credit union’s ability to protect its cardholders. It will be important to emphasize that cardholder involvement is an added layer of protection to the layers your credit union already has in place. Following a breach, communicate early and often about zero-liability and provisional credit policies.

Importantly, don’t wait until after a major incident to deploy the above strategies. Counterfeiters often sit back for months before pulling the trigger on their fraudulent transactions, so ongoing education about diligent monitoring of transactions is always a good idea.

Nicole Reyes

Nicole Reyes

Nichole has two main duties - back up for creating, managing Falcon system strategies; research, detect, mitigate fraud trends. Second duty is managing and promoting the Fraud & Risk Analysis- ... Web: Details