Card fraud hitting consumer confidence
One in five card fraud victims will avoid doing business with companies that lose their data, study shows
Card fraud caused by data breaches, and increased awareness of fraud is having a significant impact on consumer confidence in organisations, according to the US National Consumers League.
A survey of victims of card fraud conducted on behalf of the NCL showed that victims are increasingly likely to avoid doing business with the organisations involved with the data breach, and are also likely to show less confidence in organisations of a similar nature.
Existing card fraud rose in the US from $8bn in 2012 to $11bn in 2013 in total fraud losses, while the ratio of data breach victims who then experience identity fraud increased from one in nine in 2010 to one in three in 2013.
The survey, by Javelin Strategy & Research, found that victims of card fraud believe that all organisations involved in a data breach - both the business that collected the data and the financial institution that issued the card - should be held accountable for fraud.
However, retailers in particular suffered a much greater drop in customer confidence if they were responsible for a data breach. Six in ten victims said their level of trust in retailers that were responsible for a breach ‘declined significantly', while for financial institutions only 28% had a similar drop in confidence.
Only 10% of those whose data was breached by an incident with a retailer are confident that the retailer could protect them from future fraud, while 19% of victims will avoid doing business with a retailer, financial organisation or other business where their personal data was breached. Thirteen percent of victims will avoid doing business with organisations that are similar to the organisation that suffered the data breach.