Fraud protection, resolution key to customer satisfaction

Fraud protection and resolution have become an unrelenting problem, as well as a critical component of customer satisfaction for financial institutions and credit card companies, a new J.D. Power survey revealed.

The consumer data and analytics firm took the pulse of nearly 23,000 consumers with checking, savings and card accounts at the largest U.S. financial institutions and card issuers between March and September 2024. What it found was that nearly three in 10 (29 percent) of FI customers and 22 percent of credit card customers had experienced some instance of fraudulent activity on their accounts in the preceding 12 months.

The upshot: as financial fraud continues to escalate, the protection FIs and other card issuers provide, and how they respond to incidences of fraud, have become key differentiators in terms of overall customer satisfaction and brand loyalty.

"Financial fraud is a big problem for banks and credit card issuers, but it also presents an opportunity from a customer experience perspective when it is handled well," said Jennifer White, senior director, banking and payments intelligence at J.D. Power.

"In fact," White continued, "customer likelihood to reuse their bank or credit card company and then recommend that entity to friends is actually higher after an institution helps prevent or resolves a fraud incident than when there is no fraud incident at all.

"However, many institutions still have a lot of work to do when it comes to educating customers on how to protect themselves."

Younger consumers more likely to be fraud victims

Following are specific findings of the study, J.D. Power's inaugural pulse-taking of consumer satisfaction with financial protection.

• FI customers under the age of 40 are more likely to be victims than their elders; 42 percent had experienced some form of checking, savings or debit fraud in the previous 12 months, compared to just 29 percent of all those surveyed.

• It's not uncommon for FI customers who are hit with financial fraud to be victimized more than once. Many of the surveyed victims revealed that they had been hit by fraud more than once in the preceding 12 months.

• Forty-six percent of FI customers and nearly half (49 percent) of credit card customers said they have a more positive impression of their FI or credit card issuers after experiencing an instance of fraud, and a whopping 92 percent of FI customers said they were likely to reuse that FI after experiencing an fraud issue and having it resolved.

• Customers want to help fight fraud, but many do not know how. More than one in four (26 percent) of FI customers and nearly one in three (31 percent) of credit card customers said they have not taken any measures to secure their accounts. Among those who have taken proactive measures, the most frequently used strategy is reviewing frequent transactions for suspicious activity, which is not preventative.

  When it comes to true fraud prevention tactics, such as adding two-factor authentication, setting up account alerts, or using face or fingerprint authentication to log into accounts, these steps are being taken by customers not more than 20 percent of the time.

• FIs and credit card issuers need to be more proactive in protecting customers. Among bank customers, just 46 percent said they have been prompted by their FI to act on fraud prevention measures in the past 90 days. The number falls to 40 percent among credit card customers.

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