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Global Consumers: Losing Confidence in the Battle Against Fraud

JUNE 2014

Shirley W. Inscoe

Research sponsored by:

Global Consumers: Losing Confidence In the Battle Against Fraud June 2014

© 2014 Aite Group LLC. All rights reserved. Reproduction of this report by any means is strictly prohibited. 101 Arch Street, Suite 501, Boston, MA 02110 • Tel +1.617.338.6050 • Fax +1.617.338.6078 • [email protected] • www.aitegroup.com

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TABLE OF CONTENTS IMPACT POINTS .............................................................................................................................................. 4 INTRODUCTION .............................................................................................................................................. 5

METHODOLOGY ........................................................................................................................................ 5 GLOBAL CARD FRAUD SNAPSHOT .................................................................................................................. 6 FRAUD IN THE AMERICAS ............................................................................................................................. 13

RISKY BEHAVIOR ..................................................................................................................................... 13 REPLACEMENT CARDS............................................................................................................................. 16 CONSUMER ATTITUDES TOWARD FRAUD .............................................................................................. 20

FRAUD IN EUROPE, THE MIDDLE EAST, AND AFRICA ................................................................................... 23 RISKY BEHAVIOR ..................................................................................................................................... 23 REPLACEMENT CARDS............................................................................................................................. 27 CONSUMER ATTITUDES TOWARD FRAUD .............................................................................................. 34

FRAUD IN THE ASIA-PACIFIC ......................................................................................................................... 38 RISKY BEHAVIOR ..................................................................................................................................... 38 REPLACEMENT CARDS............................................................................................................................. 41 CONSUMER ATTITUDES TOWARD FRAUD .............................................................................................. 45

RECOMMENDATIONS ................................................................................................................................... 48 RELATED AITE GROUP RESEARCH ................................................................................................................. 49 ABOUT AITE GROUP...................................................................................................................................... 50

AUTHOR INFORMATION ......................................................................................................................... 50 CONTACT ................................................................................................................................................. 50

LIST OF FIGURES FIGURE 1: CURRENT TOTAL CARD FRAUD RATES BY COUNTRY ..................................................................... 7 FIGURE 2: CURRENT CREDIT CARD FRAUD RATES .......................................................................................... 9 FIGURE 3: CURRENT DEBIT CARD FRAUD RATES .......................................................................................... 10 FIGURE 4: MULTIPLE FRAUD INCIDENTS ...................................................................................................... 11 FIGURE 5: CURRENT PREPAID CARD FRAUD RATES ...................................................................................... 12 FIGURE 6: RISKY BEHAVIOR IN THE AMERICAS ............................................................................................. 14 FIGURE 7: RISKY BEHAVIOR TRENDS IN THE AMERICAS ............................................................................... 15 FIGURE 8: RISKY BEHAVIOR AND FRAUD EXPERIENCED IN THE AMERICAS ................................................. 16 FIGURE 9: REPLACEMENT CARDS IN THE AMERICAS .................................................................................... 17 FIGURE 10: USE OF REPLACEMENT CARDS IN THE AMERICAS ..................................................................... 17 FIGURE 11: SATISFACTION WITH FINANCIAL INSTITUTION AFTER FRAUD IN THE AMERICAS ..................... 18 FIGURE 12: SWITCHING BEHAVIOR IN THE AMERICAS ................................................................................. 19 FIGURE 13: BACK-OF-WALLET BEHAVIOR IN THE AMERICAS ....................................................................... 20 FIGURE 14: CONSUMER TRUST IN FINANCIAL INSTITUTIONS IN THE AMERICAS ......................................... 21 FIGURE 15: CONSUMERS’ FRAUD CONCERNS IN THE AMERICAS ................................................................. 22



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FIGURE 16: RISKY BEHAVIOR IN EMEA (1/2)................................................................................................. 23 FIGURE 17: RISKY BEHAVIOR IN EMEA (2/2)................................................................................................. 24 FIGURE 18: RISKY BEHAVIOR AND FRAUD EXPERIENCED IN EMEA (1/2) ..................................................... 26 FIGURE 19: RISKY BEHAVIOR AND FRAUD EXPERIENCED IN EMEA (2/2) ..................................................... 27 FIGURE 20: REPLACEMENT CARDS IN EMEA (1/2) ........................................................................................ 28 FIGURE 21: REPLACEMENT CARDS IN EMEA (2/2) ........................................................................................ 28 FIGURE 22: USE OF REPLACEMENT CARDS IN EMEA .................................................................................... 29 FIGURE 23: SATISFACTION WITH FINANCIAL INSTITUTION AFTER FRAUD IN EMEA (1/2) ........................... 30 FIGURE 24: SATISFACTION WITH FINANCIAL INSTITUTION AFTER FRAUD IN EMEA (2/2) ........................... 31 FIGURE 25: SWITCHING BEHAVIOR IN EMEA ............................................................................................... 32 FIGURE 26: BACK-OF-WALLET BEHAVIOR IN EMEA (1/2) ............................................................................. 33 FIGURE 27: BACK-OF-WALLET BEHAVIOR IN EMEA (2/2) ............................................................................. 34 FIGURE 28: CONSUMERS' TRUST IN FINANCIAL INSTITUTIONS IN EMEA (1/2) ............................................ 35 FIGURE 29: CONSUMERS' TRUST IN FINANCIAL INSTITUTIONS IN EMEA (2/2) ............................................ 35 FIGURE 30: CONSUMERS' FRAUD CONCERNS IN EMEA (1/2)....................................................................... 36 FIGURE 31: CONSUMERS' FRAUD CONCERNS IN EMEA (2/2)....................................................................... 37 FIGURE 32: RISKY BEHAVIOR IN THE ASIA-PACIFIC ....................................................................................... 39 FIGURE 33: RISKY BEHAVIOR TRENDS IN THE ASIA-PACIFIC ......................................................................... 40 FIGURE 34: RISKY BEHAVIOR AND FRAUD EXPERIENCED IN THE ASIA-PACIFIC ........................................... 41 FIGURE 35: REPLACEMENT CARDS IN THE ASIA-PACIFIC .............................................................................. 42 FIGURE 36: USE OF REPLACEMENT CARDS IN THE ASIA-PACIFIC ................................................................. 42 FIGURE 37: SATISFACTION WITH FINANCIAL INSTITUTION AFTER FRAUD IN THE ASIA-PACIFIC ................. 43 FIGURE 38: SWITCHING BEHAVIOR IN THE ASIA-PACIFIC ............................................................................. 44 FIGURE 39: BACK-OF-WALLET BEHAVIOR IN THE ASIA-PACIFIC ................................................................... 45 FIGURE 40: CONSUMERS' TRUST IN FINANCIAL INSTITUTIONS IN THE ASIA-PACIFIC .................................. 46 FIGURE 41: CONSUMERS' FRAUD CONCERNS IN THE ASIA-PACIFIC ............................................................. 47

LIST OF TABLES TABLE A: RISKY BEHAVIOR TRENDS IN EMEA ............................................................................................... 24



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IMPACT POINTS • This Impact Report, based on a Q1 2014 ACI Worldwide study of 6,159 consumers in

20 countries, provides an overview of respondents' attitudes toward various types of financial fraud and discusses the actions they may take subsequent to a fraud experience. Where applicable, it also compares these results with those from similar ACI surveys in 2011 and 2012.

• Of all cardholders—debit, credit, and prepaid—27% have experienced card fraud in the past five years. This percentage is unchanged since the 2012 study.

• After experiencing fraud, 63% of consumers use their card less, at least in some situations, than they used their card previously.

• In 2014, 14% of debit and credit card holders cite having experienced fraud multiple times during the past five years.

• Of cardholders who received replacement cards as a result of a data breach or fraudulent activity in the past year, 43% used the new card less than the original.

• Consumers who are dissatisfied with how they are treated by their financial institution after experiencing fraud sometimes change providers, resulting in a global attrition rate of 23%.

• Fifty-five percent of respondents are "very concerned" about reclaiming their financial identity if they become a victim of identity theft; this represents a twofold increase in consumers with this level of concern from 2011.

• Eighteen percent of global consumers lack confidence that their financial institution can protect them against fraud.

• Forty-nine percent of global consumers exhibit at least one risky behavior, which puts them at higher risk of financial fraud.



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INTRODUCTION With 1,367 confirmed data breaches1 in 2013 alone, the security of the financial services value chain is a topic of frequent discussion in the media as well as around the dinner table. Organized fraud rings are constantly coming up with creative new methods of stealing funds and identities, and consumers are increasingly losing confidence that there is anything that can be done to reverse this downward spiral.

This Impact Report, the first in a two-part series on how financial fraud affects consumers, will examine how concerns related to fraud are overwhelming consumers, who are losing confidence on a variety of levels—they are uncertain their financial institutions can protect them against fraud and, after experiencing fraud or receiving a replacement card, often change providers or send their cards to the dreaded back of wallet. This report will also, to the extent possible, identify trends in consumer behavior and attitudes.

The second report in the series will demonstrate that consumers are not confident that retailers' security systems adequately protect their data either when they shop in stores or when the retailers store their data. It will also focus on consumers' willingness to engage in the battle against fraud and show how they prefer to be contacted by their financial institutions.

METH ODOLOGY ACI Worldwide, a global leader in electronic payments for financial institutions, retailers, and processors, conducted online quantitative market research in March 2014 and surveyed 6,159 consumers. The study was conducted in a total of 20 countries in the following regions:

• The Americas (North and South America): Brazil, Canada, Mexico, and the United States

• EMEA (Europe, the Middle East, and Africa): France, Germany, Italy, the Netherlands, Poland, Russia, South Africa, Sweden, the United Arab Emirates, and the United Kingdom

• The Asia-Pacific: Australia, China, India, Indonesia, New Zealand, and Singapore

In total, 6,159 consumers were included in the research: approximately 300 consumers, divided equally between men and women, participated in each of the 20 countries. Of the total, 6,041 own one or more type of payment card (i.e., credit card, debit card, prepaid card). This is the fourth time that ACI has fielded this type of survey, and some comparative results are included for the past two studies.

In each country, the data have a margin of error of approximately 5 points. Statistical tests of significance, where shown, were conducted at the 95% level of confidence.

1. Verizon, 2014 Data Breach Investigations Report, http://www.verizonenterprise.com/DBIR/2014/,

accessed June 12, 2014.



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GLOBAL CARD FRAUD SNAPSHOT Card fraud comprises unauthorized activity on three types of payment cards—debit, credit, and prepaid. Cardholders experience fraud at very different rates around the globe, and each type of card has unique fraud challenges. The United Arab Emirates (UAE) has the highest rate of fraud overall at 44%, followed by China at 42%, and India and the United States at 41% each (Figure 1).

Compared to the study fielded in Q3 2012, the rates of fraud among various countries have moved, but fraud rates overall are relatively flat. In the 2012 study, Mexico had the highest rate of card fraud at 44%, followed by the United States at 42%, India at 37%, and the UAE at 36%.2 The 2014 study added three new countries, New Zealand, Poland, and Russia, so comparative data is unavailable for those countries.

2. See Aite Group's report Global Consumers React to Rising Fraud: Beware Back of Wallet, October

2012.



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Figure 1: Current Total Card Fraud Rates by Country

Source: Aite Group, ACI Worldwide studies of consumers in 20 countries, Q1 2014 and in 17 countries, Q3 2012

Credit card fraud rates in the 2014 study reflect that consumers around the globe are still experiencing card fraud despite the rollout of EMV. The United States is the final G-20 country to deploy EMV, and cards are already in the market, with current issuance focusing on international travelers and general issuance to mass-market consumers picking up steam in Q4 2014.3 Many small issuers will likely roll out EMV cards more slowly than the largest issuers, so it will likely 3. See Aite Group's report EMV: Lessons Learned and the U.S. Outlook, June 2014.

10%

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Italy

Canada

Indonesia

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France

Singapore

United Kingdom

Brazil

South Africa

Australia

Mexico

United States

India

China

UAE

Percentage of Respondents Who Have Experienced Card Fraud in the Past 5 Years, 2012 vs. 2014

2012 (n=5,114)

2014 (n=6,041)



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take years before the U.S. market is fully EMV-compatible. After rolling out EMV, other countries have experienced a big decrease in counterfeit card fraud, but this has been offset by growth in counterfeit fraud in non-EMV countries, growth in card-not-present fraud, and growth in application fraud. Since the United States is the last G-20 country to deploy EMV, we anticipate an even higher spike in card-not-present fraud than prior countries have experienced (there literally is no other major country left for the fraudsters to attack with counterfeit cards). Of course, counterfeit card usage will not disappear in the United States in the short term, since many merchants will use terminals that will accept magnetic stripe cards for years after EMV has partially been rolled out.

Credit card fraud rates vary widely among consumers in the 20 countries surveyed. Consumers in the UAE experience the highest rate of credit card fraud at 39%, followed by the United States at 36%. Sweden is the only country surveyed for which credit card fraud is in the single digits—8%; it is important to note that consumers in countries such as Sweden, Poland, and Germany are low users of credit cards. Consumers in the Netherlands also enjoy a low rate of credit card fraud; only one consumer in 10 experienced it in the past five years. In the 2012 study, the United States and Mexico were tied for first place with a fraud rate of 37%, followed by the UAE, where 33% of consumers had experienced credit card fraud (Figure 2).



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Figure 2: Current Credit Card Fraud Rates


Like with credit cards, the implementation of EMV will also curtail counterfeit fraud on debit cards. Some large issuers plan to roll out EMV debit cards right after credit, while others plan to delay debit rollout for a few months to a year. As a result, much of the current counterfeit credit card fraud in the United States may shift to debit cards after EMV-enabled credit cards roll out.

In the 2012 study, cardholders in Mexico experienced the highest rate of debit card fraud at 25%, followed by China (24%), India (21%), and the United States (20%). Consumers in China currently experience by far the highest debit card fraud rate at 30%, followed by India at 23%, and Mexico

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Sweden

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Poland

New Zealand

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Russia

France

South Africa

United Kingdom

Singapore

Australia

Brazil

Mexico

China

India

United States

UAE

Q. Have you experienced fraud on your credit card in the past 5 years?

2012 (n=5,114)

2014 (n=6,041)



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at 20%. The United States is in fourth place again at 18% (Figure 3). High rates of debit card fraud closely correlate with a lack of EMV or an early stage of EMV implementation.

Figure 3: Current Debit Card Fraud Rates


Many consumers experienced debit and credit card fraud on more than one occasion. Fourteen percent of global consumers experienced debit or credit card fraud more than once in the past five years, a similar result to the 2012 study (Figure 4).

4%

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Poland

France

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South Africa

Russia

United States

Mexico

India

China

Q. Have you experienced fraud on your debit card in the past 5 years?

2012 (n=5,114)

2014 (n=6,041)



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Figure 4: Multiple Fraud Incidents

Source: Aite Group, ACI Worldwide study of consumers in 20 countries, Q1 2014

Last, but certainly not least, are prepaid cards. In terms of tenure, prepaid cards are the most recent type of payment cards on the market. Prepaid card fraud rates vary widely among consumers around the globe, similarly to credit and debit cards. The highest rate of fraud on prepaid cards is experienced by consumers in India at 18%, followed by China at 17%, Indonesia at 11%, and Italy and Singapore at 10%. Consumers in all other countries enjoy a rate of fraud in the single digits on prepaid cards (Figure 5).

6%

14% 14%

2011 respondents (N=4,200)

2012 respondents (n=4,247)

2014 respondents (n=4,248)

Q. Have you experienced more than 1 incident of debit or credit card fraud in the past 5 years?



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Figure 5: Current Prepaid Card Fraud Rates


Prepaid card rates are far lower than other types of cards, but that is likely tied to usage of this relatively new payment vehicle. Cards with very high usage rates in countries such as China and India experience higher rates of fraud. This may indicate that as usage rates grow in countries with current low rates of fraud, fraud will increase as well.

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Mexico

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UAE

Singapore

Italy

Indonesia

China

India

Q. Have you experienced fraud on your prepaid card in the past 5 years? (n=6,041)



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FRAUD IN THE AMERICAS This section of the report examines consumer behaviors related to financial fraud in the Americas. Consumers in the Americas primarily live in countries whose banking systems have existed for centuries and where consumers have broad access to the banking system; Brazil is an exception, as the banking sector there really started revving up in the 1990s. As a result, traditional banking products and services are widely deployed in most countries in this region.

R ISKY BEH AVIOR Consumer behavior sometimes influences whether consumers become fraud victims; in other instances, they may be powerless to prevent it. For example, a consumer who writes the personal identification number (PIN) for his debit card on the card and has the card stolen has enabled the thief to steal funds from his account(s) via an ATM. Conversely, a consumer who purchases goods from a retailer and uses her PIN at the point of sale has done nothing inappropriate. But if the retailer stores that card number and PIN in an unencrypted manner, then has a data breach, the innocent cardholder still becomes a victim of debit card fraud when a cybercriminal uses the cardholder's information. The outcome in both cases results in criminals emptying the victim's bank account, so it is not surprising that consumers may find protecting themselves against financial fraud frustrating.

To begin, consumers were asked if they have demonstrated any of five specific behaviors in the past five years. These behaviors range from those consumers have been warned about for years (e.g., using a public computer for online banking) to newer threats (e.g., improper mobile phone security). Most consumers would never leave their computer totally unsecured but do not view their smartphones and tablets as the mini computers they actually are. While the level of risk associated with each behavior may vary, all five behaviors are deemed risky.

Consumers in Mexico are the most likely to exhibit risky behavior. One-third (33%) state they leave smartphones unlocked when not in use, 27% state they throw documents with bank account numbers in the trash bin, and 20% state they use online banking or shop online without security software or on a public computer. In Brazil, 30% of consumers indicate they throw documents with bank account numbers in the trash, 22% use online banking or shop online on a computer without security software or on a public computer, and 21% leave smartphones unlocked when they are not using them. In the United States, 13% of consumers throw documents with bank account numbers in the trash, and 11% use unsecure computers to bank or shop online. Twelve percent of Canadians throw documents with bank account numbers in the trash and leave smartphones unlocked when not in use. Overall, consumers in all of the Americas countries surveyed seem to have learned not to respond to emails and calls requesting bank account information; Brazil has the highest rate of consumers who still do this, at 7% (Figure 6).



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Figure 6: Risky Behavior in the Americas


In order for financial fraud to decrease, consumers must play a role, and limiting risky behavior is one way consumers can help protect themselves. Unfortunately, data available from prior surveys do not demonstrate consistent downward trends in risky behavior; this indicates that consumers really don’t understand risky behavior and the negative impact it can have on them. Consumers are not changing their behavior in a way that indicates an understanding of risk and a desire to protect themselves. In Brazil and Canada, participation in several risky behaviors increased from 2011 to 2012, then decreased again in 2014; this was most apparent in throwing documents with bank account numbers in the trash. While downward trends cannot be shown across the board, the good news is that exhibiting risky behaviors is flat or slightly down in most categories in each country surveyed (Figure 7).

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Made a note of your PIN and carried it with you or

kept it with your card

Thrown papers or documents with account

numbers (e.g., bank statements) in the trash

bin

Used online banking or Internet shopping without security software or on a

public computer

Responded to emails or calls asking for bank

details

Left smartphone unlocked when not using it

Q. Which of the following have you done in the past 5 years?

Brazil (n=300)

Canada (n=304)

Mexico (n=307)

United States (n=311)



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Figure 7: Risky Behavior Trends in the Americas


Does risky behavior actually increase the likelihood of becoming a fraud victim? In Canada, Mexico, and the United States, consumers who exhibit risky behavior also experience a higher rate of fraud. In Brazil, however, this is not the case. As an example, 50% of the consumers who exhibit risky behavior in the United States are victims of card fraud, while only 38% of consumers in the same country who do not exhibit risky behavior experience card fraud. Similar situations occur in Canada and Mexico, indicating that if risky behavior continues to decline, it may help decrease card fraud (Figure 8).

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Risky Behavior Trends Over 2011, 2012, and 2014 (Where data is available)


Responded to emails or calls asking for bank details

Used online banking or Internet shopping without security software or on a public computer

Thrown papers or documents with account numbers (e.g., bank statements) in the trash bin

Made a note of your PIN and carried it with you or kept it with your card



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Figure 8: Risky Behavior and Fraud Experienced in the Americas


R EPLACEMENT CARD S Data breaches allow various consumer data to potentially fall into the hands of the bad guys. The retailer Target experienced one of the largest breaches in recent years, followed quickly by Neiman Marcus, Michaels, and many others. In data breaches such as these, data such as payment card numbers, PINs, and email addresses is often at risk. As a result of some breaches, card issuers mail replacement cards to their cardholders even if there has not yet been fraud on the account. Consumers may not fully understand why they are receiving a replacement card, so good communication is essential. If a consumer uses a replacement card less often than he or she used the original card, the card issuer experiences a drop in revenue.

In the Americas, 41% of Americans received a replacement card during the past year, along with 24% of Mexicans, 17% of Canadians, and 27% of Brazilians. Given the huge Target breach, which was largely limited to the United States, it is not surprising that the highest rate of replacement cards are in that country. Some consumers received more than one replacement card during the past year (Figure 9).

28%33%

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(n=166) (n=119) (n=90) (n=214) (n=166) (n=124) (n=88) (n=221)

Brazil Brazil Canada* Canada* Mexico* Mexico* United States*

United States*

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

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risky behavior

Fraud Experienced by Respondents Who Did and Did Not Participate in Risky Behavior in the Americas

Experienced card fraud Did not experience card fraud

* Statistically significant difference in card fraud experience between those who engaged in risky behavior and

those who did not



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Figure 9: Replacement Cards in the Americas


In some countries, replacement cards are far more likely to go to back of wallet (and be used less often) than in others. For example, in Mexico, 61% of consumers are likely to place the card in back of wallet and not use it as much as the card it replaced. In Brazil, 47% of consumers exhibit back-of-wallet behavior; in Canada, 31% send replacement cards to back of wallet; and in the United States, 29% of consumers use the replacement card less. Less usage of a replacement card, particularly if it is issued because of a data breach when no fraudulent transactions have occurred, demonstrates the customer's loss of confidence in the card or the card issuer (Figure 10).

Figure 10: Use of Replacement Cards in the Americas


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Q. Has your financial institution sent a new debit, credit, or prepaid card to you during the past year because of a data breach or fraudulent

activity?

Brazil (n=285)

Canada (n=301)

Mexico (n=288)


47%

31%

61%

29%

Brazil(n=74)

Canada(n=48)

Mexico(n=69)

United States(n=126)

Percentage of Respondents in the Americas Who Use Their Replacement Card Less as a Result of Fraud or a Breach



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Being a victim of fraud can be traumatic, leaving consumers feeling violated. Since it can be a very emotional experience, financial institutions must use good customer service to calm customers and help them through the required post-fraud process.

In the Americas, Canadians are the most pleased with treatment from their institution after experiencing fraud; 89% of consumers there are at least somewhat happy with the treatment they experienced. Second is the United States, where 78% of consumers are at least somewhat happy with their treatment. In sharp contrast to those are Mexico and Brazil, where 48% and 60% of consumers respectively are at least somewhat dissatisfied with their treatment by their financial institution after experiencing fraud (Figure 11).

Figure 11: Satisfaction With Financial Institution After Fraud in the Americas


Consumers who experience fraud and are dissatisfied with their financial institution after the experience sometimes change providers as a result. Given the unhappy customer dissatisfaction rates in Mexico and Brazil, it is not surprising to see that 33% and 21% of consumers in those respective countries change providers after the fraud experience. It is expensive for financial institutions to attract new customers, so improving customer satisfaction among customers who experience fraud and retaining those customers is important. In the United States, 9% of consumers switch providers, and in Canada, only 6% do so (Figure 12).

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Q. How happy were you with the treatment from your financial institution when you experienced card fraud?

Brazil (n=85)

Canada (n=65)

Mexico (n=96)




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Figure 12: Switching Behavior in the Americas


Canadians exhibit the least back-of-wallet behavior after experiencing fraud, and even there, 31% of consumers use their cards somewhat less after a fraud experience. The United States is next, where 38% of consumers use their cards to some degree less than they did prior to the fraud. When nearly four consumers in 10 reduce their use of cards, card issuers experience a large reduction in revenue. Unsurprisingly, in Brazil (60%) and Mexico (78%),very high percentages of consumers use their cards much less than they did prior to the fraud experience, negatively impacting issuer revenue even more (Figure 13).

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Brazil(n=85)

Canada(n=65)

Mexico(n=96)


Q. As a result of your experience with fraud, did you change your financial institution or credit card company?

Yes, I did No, I did not



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Figure 13: Back-of-Wallet Behavior in the Americas


CONSUMER AT TIT UDES TOWARD FRAUD Consumers are constantly bombarded by news about fraud in the press—stories of computer hackers, data breaches, collusive fraud rings, and victims of identity theft; stories of all types of financial fraud, including tax fraud, healthcare fraud; and on and on. In this environment, can consumers depend on their financial institution to protect them from fraud?

In the Americas, consumers do not have absolute confidence that their financial institutions can protect them, but the majority (between 52% and 62%) do feel the financial institutions are doing what they can. This attitude implies they are not confident that financial institutions have the power to protect them, which is understandable given the lack of control financial institutions have over fraudster behavior. Consumers hear about skimming attacks in restaurants, at ATMs, and at gas stations … With such subterfuge occurring on behalf of the fraudsters, consumers understand that financial institutions cannot be all-powerful.

Some consumers express a bit more skepticism and feel financial institutions could be doing more to protect them; this sentiment is shared by 18% of consumers in Brazil, 13% in Mexico, 8% in the United States, and 6% in Canada. The smallest group of consumers have very little confidence that their financial institutions can protect them at all—9% in Mexico, 4% in Brazil, 3% in the United States, and 1% in Canada (Figure 14).

61%

22%

69%

40%

28%

51%

23%

40%

8%

23%

5%

15%

2%

4%

3%

5%


Mexico (n=96)

Canada (n=65)

Brazil (n=85)

Q. When you experienced fraud, did you choose to use cash or an alternative payment method over a credit or debit card following the card

fraud incident?

Used cash instead of my debit card, but not instead of my credit card

Yes, in all situations

Yes, but only in some situations

No



21

Figure 14: Consumer Trust in Financial Institutions in the Americas


Consumers are concerned about a wide variety of fraud types. In the countries where fraud rates are highest, consumers express higher degrees of concern. In the United States, despite high rates of fraud, consumers express less concern; this is likely because U.S. consumers are protected by federal legislation and payment network policies that require financial institutions to reimburse them when they are victimized by electronic fraud. Consumers in Mexico and Brazil are more concerned about every category of fraud than consumers in the United States and Canada. In Brazil and Mexico, consumers are most concerned about identity theft and fraud on their debit cards. In the United States and Canada, consumers are most concerned about identity theft, data breaches that result in compromised account numbers, and fraud on their credit cards (Figure 15).

18%

60%

18%

4%

31%

62%

6%1%

25%

52%

13% 9%

30%

59%

8%3%

Yes, absolute confidence

Yes, to an extent, they're doing what they

can

Not really, they could do more

No, I have very little confidence they can

Q. Do you have confidence in your financial institution to protect you from card fraud?

Brazil (n=285) Canada (n=301) Mexico (n=288) United States (n=306)



22

Figure 15: Consumers’ Fraud Concerns in the Americas


39%

35%

14%

23%

37%

30%

44%

42%

78%

82%

49%

53%

69%

75%

82%

78%

41%

34%

14%

19%

33%

29%

50%

43%

69%

71%

43%

57%

67%

64%

71%

72%

Fraud on my credit card

Fraud on my debit card

Fraud on my prepaid card

Cheque/Check fraud

Online banking fraud

Direct debit fraud (auto payment from account)

Identity theft

Data breach resulting in compromised account

numbers

Percentage of Consumers Who Are "Very Concerned" About Fraud Types in the Americas

Brazil (n=300)

Canada (n=304)

Mexico (n=307)




23

FRAUD IN EUROPE, THE MIDDLE EAST, AND AFRICA Many countries in Europe, the Middle East, and Africa have well-developed banking systems, although not all do. Some have emerging economies with consumers having access to many banking products in relatively recent years. It is somewhat difficult to compare financial fraud across such diverse economies, but this section does so.

R ISKY BEH AVIOR Similar to consumers in the Americas, consumers in EMEA are largely educated to ignore emails and calls requesting details about their bank accounts, although 9% of consumers in Russia and South Africa still respond. Likewise, consumers in most countries no longer make a note of their PIN and carry it with their cards; however, 20% of consumers in both Italy and Russia still do so, along with 17% of consumers in the UAE. Across all the countries of EMEA, between 13% and 31% of consumers throw papers containing bank account numbers in the trash. With the exceptions of the Netherlands (4%), the United Kingdom (9%), and France (10%), consumers in high percentages (14% to 37%) use computers without security software or public computers for online banking or online shopping. Failing to lock smartphones when not in use is a trait shared across the countries at a rate of 9% to 25% (Figure 16 and Figure 17).

Figure 16: Risky Behavior in EMEA (1/2)


7%

13%

24%

8%

9%

2%

16%

4%

3%

15%

20%

20%

18%

6%

16%

10%

18%

14%

3%

14%

5%

19%

10%

3%

17%

Made a note of your PIN and carried it with you or kept it with

your card

Thrown papers or documents with account numbers (e.g., bank statements) in the trash

bin

Used online banking or Internet shopping without security software or on a public

computer



Q. What of the following have you done in the past 5 years?

France (n=300)

Germany (n=299)

Italy (n=308)

The Netherlands (n=304)

Poland (n=302)



24

Figure 17: Risky Behavior in EMEA (2/2)


Looking across the last three studies, very few countries show consistent declines in risky behavior. Only Sweden and the United Kingdom show percentages of consumers who write PINs down and keep them with their card trending downward, although only 2% of consumers do so in the Netherlands. South Africa is the only country that shows strong improvement in the percentage of consumers who throw papers with account numbers in the trash. No country in EMEA showed steady improvement in the percentages of consumers who use unsecure computers to do online banking or shopping, but less than 10% of consumers respond to emails or phone calls concerning bank accounts in all EMEA countries. South Africa, Sweden, and the United Kingdom all show strong improvement between studies in percentages of consumers who leave their smartphone unsecured when not in use (Table A).

Table A: Risky Behavior Trends in EMEA

Risky behavior Country 2011 2012 2014 Made a note of your PIN and carried it with you or kept it with your card

France Germany Italy The Netherlands Poland Russia

8% 4% 7% 13% No data No data

3% 10% 17% 2% No data No data

5% 10% 20% 2% 7% 20%

8%

15%

9%

3%

16%

17%

26%

22%

8%

25%

7%

29%

14%

1%

17%

11%

31%

16%

9%

22%

20%

20%

37%

9%

21%

Made a note of your PIN and carried it with you or kept it

with your card

Thrown papers or documents with account

numbers (e.g., bank statements) in the trash bin

Used online banking or Internet shopping without security software or on a

public computer




Russia (n=308)

South Africa (n=314)

Sweden (n=301)

UAE (n=318)

United Kingdom (n=310)



25

Risky behavior Country 2011 2012 2014 South Africa Sweden The UAE United Kingdom

No data 14% 11% 13%

12% 9% 14% 12%

11% 7% 17% 8%

Thrown papers or documents with account numbers (e.g., bank statements) in the trash bin

France Germany Italy The Netherlands Poland Russia South Africa Sweden The UAE United Kingdom

13% 13% 26% 24% No data No data No data 29% 49% 30%

33% 15% 32% 14% No data No data 58% 43% 41% 16%

19% 18% 20% 16% 13% 20% 31% 29% 26% 15%

Used online banking or Internet shopping without security software or on a public computer



10% 14% 19% 3% No data No data 17% 14% 24% 8%

10% 14% 18% 4% 24% 37% 16% 14% 22% 9%




4% 5% 4% 3% No data No data 5% 4% 12% 3%

3% 3% 6% 3% 8% 9% 9% 1% 8% 3%



No data No data No data No data No data No data No data No data No data No data

13% 16% 19% 16% No data No data 27% 25% 24% 23%

17% 14% 16% 15% 9% 21% 22% 17% 25% 16%




26

In seven out of 10 EMEA countries, consumers who exhibit risky behavior experience fraud at higher rates than consumers who refrain from risky behavior. In the three countries where this was not the case, South Africa, Sweden, and the United Kingdom, fraud rates are relatively flat among consumers who did and did not behave in risky ways. In no countries in EMEA did consumers who refrain from risky behavior experience a higher rate of fraud than those who did not refrain (Figure 18 and Figure 19).

Figure 18: Risky Behavior and Fraud Experienced in EMEA (1/2)


36%

18%24%

11%

29%

11%

18%

11%

31%

8%

59%

77%73%

87%

70%

88%

81%

89%

69%

92%

(n=118) (n=180) (n=120) (n=178) (n=158) (n=148) (n=91) (n=212) (n=119) (n=156)

France* France* Germany* Germany* Italy* Italy* The Neth-erlands*

The Neth-erlands*

Poland* Poland*

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Fraud Experienced by Respondents Who Did and Did Not Participate in Risky Behavior in EMEA

Experienced card fraud Have not experienced card fraud

* Statistically significant difference in card fraud experience between those who engaged in risky behavior and those who did not



27

Figure 19: Risky Behavior and Fraud Experienced in EMEA (2/2)


R EPLACEMENT CARD S Across all the EMEA countries, consumers received one replacement card due to fraud or data breaches during the past year at a rate from 9% in Sweden (where fraud is low) to 34% in the UAE (one of the countries with high fraud rates). Many consumers received more than one replacement card during the past year (Figure 20 and Figure 21).

29%

15%

29% 31%

9% 10%

48%

37%

29% 28%

71%

84%

71% 69%

89% 90%

51%

63%

71% 70%

(n=174) (n=119) (n=168) (n=142) (n=132) (n=169) (n=188) (n=130) (n=104) (n=206)

Russia* Russia* South Africa

South Africa

Sweden Sweden UAE* UAE* United Kingdom

United Kingdom

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Engaged in risky

behavior

Did not engage in

risky behavior

Fraud Experienced by Respondents Who Did and Did Not Participate in Risky Behavior in EMEA





28

Figure 20: Replacement Cards in EMEA (1/2)


Figure 21: Replacement Cards in EMEA (2/2)


Replacement cards are not a bad thing in and of themselves. In fact, consumers are often protected from fraud by a proactive financial institution that sends them a replacement card in the wake of a data breach or identified skimming incident. In the absence of reassurance and good communication, however, consumers may not understand why they receive a replacement card and could lose confidence in using it. Across the countries of EMEA, consumers use replacement cards less than the cards they replaced at rates ranging from a low of 22% (Germany) to a high of 49% (Poland). This translates to one out of every five consumers in

%

1%

%

10%

%

%

1%

15%

%

%

1%

19%

%

%

2%

14%


Yes—3 times

Yes—twice

Yes—once


activity?

France (n=285)

Germany (n=291)

Italy (n=303)


Poland (n=275)

1%

1%

7%

34%

%

1%

4%

9%

1%

%

3%

16%

1%

%

2%

14%


Yes—3 times

Yes—twice

Yes—once


activity?

Russia (n=292)


Sweden (n=299)

UAE (n=317)




29

Germany not using the replacement cards as much as the original to one out of every two consumers using replacement cards less in Poland. This high rate of back-of-wallet behavior costs card issuers revenue and demonstrates a loss of confidence in the cards or financial institutions involved (Figure 22).

Figure 22: Use of Replacement Cards in EMEA


After experiencing fraud, over a third of consumers in six out of 10 countries in the EMEA region are at least somewhat unhappy with their financial institutions. Russia leads by far, with 65% of consumers at least somewhat unhappy after the fraud experience; Italy is not far behind at 55%. Other countries where over one-third of consumers are at least somewhat unhappy include Germany (41%), South Africa and the UAE (37% each), and Poland (36%). These high rates of unhappy customers contrast sharply with the other four countries in EMEA, where the majority of customers are at least somewhat happy with the treatment received from their financial institution after their fraud experience. In Sweden, 86% of consumers are at least somewhat happy, in the Netherlands and the United Kingdom, 82% of consumers in each country are at least somewhat happy, and in France, 79% of consumers are at least somewhat happy (Figure 23 and Figure 24).

34%

22%

44%

28%

49%43% 40% 39%

33%36%

France Germany Italy The Neth-erlands

Poland Russia South Africa

Sweden UAE United Kingdom

(n=47) (n=58) (n=50) (n=32) (n=49) (n=47) (n=60) (n=41) (n=138) (n=61)

Percentage of Respondents in EMEA Who Use Their Replacement Card Less as a Result of Fraud or a Breach



30

Figure 23: Satisfaction With Financial Institution After Fraud in EMEA (1/2)


5%

27%

24%

5%

8%

16%

14%

31%

13%

28%

42%

27%

31%

26%

46%

37%

33%

15%

56%

18%

(n=76)

(n=49)

(n=62)

(n=39)

(n=50)

Fra

nce

Germ

an

yItaly

T

he N

eth

erl

ands

Po

lan

d


Very happy

Somewhat happy

Somewhat unhappy

Very unhappy



31

Figure 24: Satisfaction With Financial Institution After Fraud in EMEA (2/2)


Even though so many customers are at least somewhat unhappy with their treatment subsequent to experiencing fraud, comparatively few consumers report that they switched financial institutions. One exception is Poland, where two out of five consumers (40%) change financial institutions after experiencing fraud. In two countries, Russia (25%) and the Netherlands (21%), at least one out of five consumers change financial institutions after experiencing fraud. Otherwise, all countries have rates less than 20%. While these rates may seem relatively low, financial institutions are competing for every customer and could decrease these levels of attrition with improved customer service for fraud victims (Figure 25).

19%

18%

7%

17%

5%

46%

19%

7%

20%

14%

28%

32%

34%

38%

26%

7%

30%

52%

24%

56%

(n=68)

(n=93)

(n=29)

(n=139)

(n=88)

Russia

So

uth

Afr

ica

Sw

ed

en

UA

EU

nited

Kin

gdom


Very happy

Somewhat happy

Somewhat unhappy

Very unhappy



32

Figure 25: Switching Behavior in EMEA


Not all unhappy consumers switch financial institutions after experiencing fraud, but they can still negatively impact their financial institution's revenue by using their card less often. Close to or over half of consumers in all but one country use cash or an alternate payment method instead of a card following their fraud incident; only in the United Kingdom do a large majority of

13%

12%

18%

21%

40%

25%

17%

3%

15%

14%

87%

88%

82%

79%

60%

75%

83%

97%

85%

86%

(n=76)

(n=49)

(n=62)

(n=39)

(n=50)

(n=68)

(n=93)

(n=29)

(n=139)

(n=88)

Fra

nce

Germ

an

yItaly

T

he

Neth

erlan

ds

Po

lan

dR

ussia

So

uth

A

fric

aS

wed

en

UA

EU

nited

K

ing

dom

Q. As a result of your experience with fraud, did you change your financial institution or credit card company?




33

consumers (63%) use their card as much as they did prior to the fraud incident. This back-of-wallet behavior negatively impacts card revenue and demonstrates consumers' loss of confidence in the card or in their financial institution (Figure 26 and Figure 27).

Figure 26: Back-of-Wallet Behavior in EMEA (1/2)


54%

37%

40%

51%

40%

30%

51%

48%

31%

36%

12%

8%

8%

18%

22%

4%

4%

3%

%

2%

(n=76)

(n=49)

(n=62)

(n=39)

(n=50)

Fra

nce

Germ

an

yItaly

T

he

Neth

erl

ands

Po

lan

d


fraud incident?




No



34

Figure 27: Back-of-Wallet Behavior in EMEA (2/2)


CONSUMER AT TIT UDES TOWARD FRAUD Less than one-third of consumers across EMEA have absolute confidence that their financial institution can protect them from fraud. As in the Americas, the majority feel that their financial institutions are doing what they can to protect them, but they aren't confident that this is enough to be effective all the time. In Russia, 34% of consumers think financial institutions could be doing a lot more to protect consumers, by far the highest percentage of consumers who feel this way in the region (Figure 28 and Figure 29).

29%

49%

52%

44%

63%

57%

35%

38%

40%

25%

12%

12%

7%

14%

11%

1%

3%

3%

3%

1%

(n=68)

(n=93)

(n=29)

(n=139)

(n=88)

Russia

So

uth

A

fric

aS

wed

en

UA

EU

nited

K

ing

dom


fraud incident?

Used cash instead of my debit card, but not instead of my credit cardYes, in all situations


No



35

Figure 28: Consumers' Trust in Financial Institutions in EMEA (1/2)


Figure 29: Consumers' Trust in Financial Institutions in EMEA (2/2)


Consumers express concern related to a wide range of financial fraud types. The majority of consumers are very concerned about identity theft, data breaches resulting in compromised account numbers, online banking fraud, and fraud on credit cards. In some countries, consumers are very concerned about fraud on their debit cards as well (Figure 30 and Figure 31).

20% 18%29%

16%28%

60%66%

52%

66% 60%

15% 12% 15% 16%9%5% 4% 5% 3% 2%

France Germany Italy The Netherlands Poland

(n=285) (n=291) (n=303) (n=302) (n=275)


Yes, absolute confidence Yes, to an extent, they're doing what they can

Not really, they could do more No, I have very little confidence they can

10%

24%16%

21%

12%

47%

62% 64% 61%

72%

34%

12% 15% 15%11%9%

3% 6% 4% 5%

Russia South Africa Sweden UAE United Kingdom

(n=292) (n=310) (n=299) (n=317) (n=307)


Yes, absolute confidence Yes, to an extent, they're doing what they can

Not really, they could do more No, I have very little confidence they can



36

Figure 30: Consumers' Fraud Concerns in EMEA (1/2)


40%

38%

24%

16%

49%

39%

53%

54%

15%

20%

7%

5%

23%

13%

22%

23%

52%

40%

34%

27%

46%

46%

58%

58%

30%

17%

15%

33%

35%

31%

33%

41%

59%

51%

25%

41%

45%

46%

66%

62%




Cheque/Check fraud


Direct debit fraud (auto payment from

account)

Identity theft

Data breach resulting in

compromised account numbers

Percentage of Consumers Who Are "Very Concerned" About Fraud Types in EMEA

France (n=300)

Germany (n=299)

Italy (n=308)


Poland (n=302)



37

Figure 31: Consumers' Fraud Concerns in EMEA (2/2)


35%

40%

11%

18%

36%

34%

41%

41%

63%

49%

28%

29%

56%

46%

59%

58%

20%

25%

13%

8%

20%

13%

30%

24%

58%

60%

32%

38%

66%

64%

74%

70%

70%

75%

55%

32%

74%

67%

67%

71%




Cheque/ check fraud



Identity theft

Data breach resulting in compromised account numbers

Percentage of Consumers Who Are "Very Concerned" About Fraud Types in EMEA

Russia (n=308)


Sweden (n=301)

UAE (n=318)




38

FRAUD IN THE ASIA-PACIFIC The final region covered by the consumer fraud study is the Asia-Pacific, with six countries included in 2014. Consumer behavior and attitudes in this region are somewhat different than in EMEA and the Americas.

R ISKY BEH AVIOR Consumer behavior in Australia and New Zealand tend to be far less risky than the rest of the Asia-Pacific. The very low percentages of consumers who carry their PIN with a card or respond to emails and calls asking for bank account information more closely resemble consumers in the Americas and EMEA than the other countries in the Asia-Pacific. Over 20% of consumers in all countries leave smartphones unlocked when not in use and throw documents with bank account numbers in the trash. In all countries except Australia and New Zealand, over 20% of consumers bank or shop online on computers without security software or on public computers (Figure 32).



39

Figure 32: Risky Behavior in the Asia-Pacific


Australia alone exhibits a consistent downward trend in risky behavior we hope to see everywhere. In other countries, consumers are up and down in these behaviors; often, we see an increase between 2011 and 2012 with a decrease in 2014. However, 2014 rates are often as high or higher than risky behavior rates in 2011. This implies a lack of consumer education or a lack of belief by consumers that their behavior really has an impact on the likelihood of fraud (Figure 33).

14%

37%

24%

14%

32%

4%

32%

13%

4%

20%

15%

37%

27%

16%

28%

25%

28%

31%

22%

29%

13%

36%

24%

16%

28%

6%

23%

8%

3%

21%

Made a note of your PIN and

carried it with you or kept it with your

card

Thrown papers or documents with

account numbers (e.g., bank

statements) in the trash bin

Used online banking or Internet shopping without

security software or on a public computer

Responded to emails or calls asking for bank

details

Left smartphone unlocked when not

using it


Australia (n=310)

China (n=302)

India (n=310)

Indonesia (n=330)

New Zealand (n=310)

Singapore (n=311)



40

Figure 33: Risky Behavior Trends in the Asia-Pacific


In every country of the Asia-Pacific region (except New Zealand, where fraud rates are only slightly higher), risky behavior and experiencing fraud clearly correlate. Educating consumers about risky behavior and the need to avoid them can help reduce fraud incidents and help consumers feel some element of control and confidence over their ability to protect themselves from becoming a victim of fraud (Figure 34).

20%

6%

6%

21%

13%

9%

26%

25%

17%

15%

15%

11%

14%

37%

28%

23%

10%

51%

36%

17%

45%

28%

39%

37%

25%

50%

37%

15%

10%

8%

26%

30%

24%

12%

31%

31%

20%

27%

20%

22%

24%

7%

4%

3%

6%

13%

16%

4%

23%

22%

16%

16%

13%

14%

0%

19%

21%

0%

26%

28%

0%

24%

29%

23%

28%

0%

23%

32%

(n=307)

(n=315)

(n=110)

(n=31)

(n=319)

(n=302)

(n=304)

(n=312)

(n=310)

(n=305)

(n=330)

(n=20)

(n=306)

(n=311)

Austr

al-

ia 2

011

Austr

al-

ia 2

012

Austr

al-

ia 2

014

Ch

ina

2011

Ch

ina

2012

Ch

ina

2014

Ind

ia

2011

Ind

ia

2012

Ind

ia

2014

Ind

one-

sia

2012

Ind

one-

sia

2014

Sin

ga-

po

re

2011

Sin

ga-

po

re

2012

Sin

ga-

po

re

2014

Risky Behavior Trends Over 2011, 2012, and 2014 (Where data is available)



Used online banking or Internet shopping without security software or on a public computerThrown papers or documents with account numbers (e.g., bank statements) in the trash binMade a note of your PIN and carried it with you or kept it with your card



41

Figure 34: Risky Behavior and Fraud Experienced in the Asia-Pacific


R EPLACEMENT CARD S In the Asia-Pacific region, consumers received at least one replacement card from a low of one in 10 in Indonesia to almost three in 10 in India. As in other regions, some consumers received multiple replacement cards during the past year (Figure 35).

41%

25%

49%

28%

50%

20%

26%

14%18%

15%

33%

17%

59%

73%

50%

72%

49%

77%74%

86%

81%84%

66%

81%

(n=123) (n=185) (n=203) (n=96) (n=210) (n=93) (n=208) (n=109) (n=151) (n=157) (n=201) (n=105)

Australia*Australia* China* China* India* India* Indo-nesia*

Indo-nesia*

New Zea-land

New Zea-land

Singa-pore*

Singa-pore*

Engaged in risky

behavior

Did not engage in risky

behavior

Engaged in risky

behavior


behavior

Engaged in risky

behavior


behavior

Engaged in risky

behavior


behavior

Engaged in risky

behavior


behavior

Engaged in risky

behavior


behavior

Fraud Experienced by Respondents Who Did and Did Not Participate in Risky Behavior in the Asia-Pacific





42

Figure 35: Replacement Cards in the Asia-Pacific


Many consumers across the Asia-Pacific region used replacement cards less than the original cards. This occurred at very high rates—from a low of 33% in Australia to a high of 72% in both India and Indonesia. This back-of-wallet behavior represents high lost revenue for financial institutions and surely shows consumers' lack of confidence (Figure 36).

Figure 36: Use of Replacement Cards in the Asia-Pacific


1%

1%

5%

21%

1%

10%

1%

3%

4%

28%

1%

2%

21%

1%

1%

3%

16%


Yes—3 times

Yes—twice

Yes—once


activity?

Australia (n=305)

China (n=297)

India (n=299)

Indonesia (n=317

New Zealand (n=305)

Singapore (n=302)

33%

57%

72% 72%

41% 43%

Australia China India Indonesia New Zealand Singapore

(n=63) (n=69) (n=109) (n=36) (n=39) (n=87)

Percentage of Respondents in the Asia-Pacific Who Use Their Replacement Card Less

as a Result of Fraud or a Breach



43

Consumer satisfaction rates with financial institutions after experiencing fraud varied dramatically by country. In Australia, 74% of consumers were at least somewhat happy after a fraud experience, and in New Zealand, 86% were at least somewhat happy. In the other countries, high percentages of consumers were unhappy after their fraud experience: 33% were at least somewhat unhappy in Singapore, 40% in China, 50% in Indonesia, and 56% in India (Figure 37).

Figure 37: Satisfaction with Financial Institution After Fraud in the Asia-Pacific


In line with high rates of unhappiness after experiencing fraud, many consumers change financial institutions after experiencing fraud. In China, India, and Indonesia, between 44% and 58% of consumers switch financial institutions after their fraud experience. These very high rates of customer attrition are very costly to financial institutions. In Singapore, 15% of consumers switch financial institutions after experiencing fraud. Australia and New Zealand have the lowest rates of switching behavior, at 7% and 6% respectively (Figure 38).

13%

9%

22%

14%

%

11%

13%

31%

34%

36%

14%

22%

19%

56%

30%

36%

29%

53%

55%

4%

14%

14%

57%

14%

(n=97)

(n=126)

(n=125)

(n=70)

(n=51)

(n=85)

Austr

alia

Ch

ina

Ind

iaIn

do

nesi

aN

ew

Zeala

nd

Sin

gapore


Very happy

Somewhat happy

Somewhat unhappy

Very unhappy



44

Figure 38: Switching Behavior in the Asia-Pacific


As seen in other regions of the world, some consumers will just place their cards in the back of wallet and not use them instead of changing financial institutions. Australia and New Zealand see the lowest rates of back-of-wallet behavior, with 61% and 64% respectively. Indonesia and Singapore have the highest rates of back-of-wallet behavior at 88% and 86% (Figure 39).

7%

46%

58%

44%

6%

15%

93%

54%

42%

56%

94%

85%

(n=97)

(n=126)

(n=125)

(n=70)

(n=51)

(n=85)

Austr

alia

Ch

ina

Ind

iaIn

do

nesi

aN

ew

Z

eala

nd

Sin

gapore

Q. As a result of your experience with fraud, did you change your financial institution or card issuer?




45

Figure 39: Back-of-Wallet Behavior in the Asia-Pacific


CONSUMER AT TIT UDES TOWARD FRAUD Consumers in India have the most confidence that their financial institution can protect them against fraud—43% feel absolute confidence in such protection, and an additional 46% feel the financial institution is doing all it can to protect them. No more than 25% of consumers in other countries express absolute confidence in the financial institution's ability to protect them (Figure 40).

38%

26%

19%

12%

36%

14%

50%

55%

52%

75%

51%

66%

8%

11%

21%

6%

8%

12%

3%

8%

8%

7%

5%

8%

(n=97)Australia

(n=126)China

(n=125)India

(n=70)Indonesia

(n=51)New Zealand

(n=85)Singapore


fraud incident?




No



46

Figure 40: Consumers' Trust in Financial Institutions in the Asia-Pacific


Across all countries, consumers in the Asia-Pacific are most concerned over identity theft, data breaches resulting in compromised account numbers, and online banking fraud (Figure 41).

25%

8%

43%

25%

21%

16%

68%

52%

46%

61%

72%

70%

6%

38%

8%

10%

6%

12%

1%

2%

2%

4%

1%

2%

(n=305)Australia

(n=297)China

(n=299)India

(n=317)Indonesia

(n=305)New Zealand

(n=302)Singapore


No, I have very little confidence they can

Not really, they could do more

Yes, to an extent, they're doing what they can

Yes, absolute confidence



47

Figure 41: Consumers' Fraud Concerns in the Asia-Pacific


68%

59%

42%

43%

72%

69%

69%

72%

39%

28%

13%

18%

41%

31%

38%

41%

58%

56%

43%

38%

60%

60%

69%

69%

55%

65%

45%

50%

66%

62%

57%

61%

48%

43%

29%

28%

51%

45%

60%

64%

47%

38%

19%

19%

46%

38%

50%

45%




Cheque /check fraud



Identity theft

Data breach resulting in compromised account

numbers

Percentage of Consumers Who Are "Very Concerned" About Fraud Types in the Asia-Pacific

Australia (n=310)

China (n=302)

India (n=310)

Indonesia (n=330)

New Zealand (n=310)

Singapore (n=311)



48

RECOMMENDATIONS Consumers are putting their personal and financial data at risk when they act in risky ways, and they deserve better education related to protecting themselves against fraud. Encouraging consumers to work with their financial institution to protect themselves is a true win-win scenario. Financial institutions can lower customer attrition rates and back-of-wallet behavior through better consumer communication and education.

For financial institutions:

• Educate and engage consumers: Help consumers understand how they can help protect themselves against fraud, and work with the financial institution to combat it.

• Provide specific examples: Consumers do not understand the importance of avoiding risky behavior such as shopping online on a public computer or not securing their smartphone or tablet when it is not in use. Public computers or those without adequate security software put consumers’ personal and financial data a high risk of being stolen. As adoption of mobile wallets and online banking increases, securing mobile devices is increasingly important.

• Communicate more effectively: Ensure consumers understand that replacement cards are safe to use, even after a data breach. Make fraud protection protocols easy to understand and available at all customer touchpoints (i.e., online, contact centers, mailers, etc.).

• Improve customer service: After experiencing fraud, consumers may be traumatized or emotional. Ensure agents are sympathetic and helpful to the greatest extent possible in order to retain victimized customers.



49

RELATED AITE GROUP RESEARCH Global Consumers React to Rising Fraud: Beware Back of Wallet, October 2012.

Look Who's Talking: Financial Institutions' Contact Centers Under Attack, April 2013.

EMV: A Roadmap and Guidebook for the U.S. Market, June 2013.

How Long Will It Take? EMV and NFC Reterminalization in the United States, July 2013.

Global Fraud and Clueless Consumers, August 2013.



50

ABOUT AITE GROUP Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, securities & investments, and insurance, Aite Group's analysts deliver comprehensive, actionable advice to key market participants in financial services. Headquartered in Boston with a presence in Chicago, New York, San Francisco, London, and Milan, Aite Group works with its clients as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they remain at the forefront of industry trends.

AUTH OR INFORMAT ION Shirley W. Inscoe +1.617.398.5050 [email protected]

CONTAC T For more information on research and consulting services, please contact:

Aite Group Sales +1.617.338.6050 [email protected]

For all press and conference inquiries, please contact:

Aite Group PR +44.(0)207.092.8137 [email protected]

For all other inquiries, please contact:

[email protected]

© 2014 Aite Group LLC. All rights reserved. Reproduction of this report by any means is strictly prohibited. Photocopying or electronic distribution of this document or any of its contents without prior written consent of the publisher violates U.S. copyright law, and is punishable by statutory damages of up to US$150,000 per infringement, plus attorneys' fees (17 USC 504 et seq.). Without advance permission, illegal copying includes regular photocopying, faxing, excerpting, forwarding electronically, and sharing of online access.

Global Consumers: Concerned and Willing to Engage in the Battle Against Fraud

JULY 2014

Shirley Inscoe

Research sponsored by:

Global Consumers: Concerned and Willing to Engage In the Battle Against Fraud July 2014


2

TABLE OF CONTENTS IMPACT POINTS .............................................................................................................................................. 4 INTRODUCTION .............................................................................................................................................. 5

METHODOLOGY ........................................................................................................................................ 5 PREPAID CARDS AND FRAUD .......................................................................................................................... 6 THE RISE OF THE MOBILE CHANNEL ............................................................................................................... 9 RETAILERS ..................................................................................................................................................... 14

IN-PERSON SHOPPING ............................................................................................................................ 14 ONLINE SHOPPING .................................................................................................................................. 16 STORED DATA ......................................................................................................................................... 19

CONSUMERS ARE CONCERNED AND WILLING TO ENGAGE IN BATTLING FRAUD ........................................ 22 PROTECTING CARD AND ACCOUNT INFORMATION ............................................................................... 28 FRAUD EDUCATION ................................................................................................................................. 32

CONCLUSION ................................................................................................................................................ 42 RELATED AITE GROUP RESEARCH ................................................................................................................. 43 ABOUT AITE GROUP...................................................................................................................................... 44

AUTHOR INFORMATION ......................................................................................................................... 44 CONTACT ................................................................................................................................................. 44

LIST OF FIGURES FIGURE 1: PREPAID CARD FRAUD RATE COMPARISON BY COUNTRY ............................................................. 6 FIGURE 2: PREPAID CARD USAGE COMPARED TO FRAUD EXPERIENCED IN THE AMERICAS ......................... 7 FIGURE 3: PREPAID CARD USAGE AND FRAUD EXPERIENCED IN EMEA ......................................................... 8 FIGURE 4: PREPAID CARD USAGE AND FRAUD EXPERIENCED IN THE ASIA-PACIFIC ...................................... 8 FIGURE 5: MOBILE WALLET ADOPTION IN THE AMERICAS ............................................................................ 9 FIGURE 6: MOBILE WALLET ADOPTION IN EMEA (1/2) ................................................................................ 10 FIGURE 7: MOBILE WALLET ADOPTION IN EMEA (2/2) ................................................................................ 10 FIGURE 8: MOBILE WALLET ADOPTION IN THE ASIA-PACIFIC ...................................................................... 11 FIGURE 9: PERCEPTIONS OF MOBILE WALLET DATA SECURITY IN THE AMERICAS ...................................... 12 FIGURE 10: PERCEPTIONS OF MOBILE WALLET DATA SECURITY IN EMEA (1/2) .......................................... 12 FIGURE 11: PERCEPTIONS OF MOBILE WALLET DATA SECURITY IN EMEA (2/2) .......................................... 13 FIGURE 12: PERCEPTIONS OF MOBILE WALLET DATA SECURITY IN THE ASIA-PACIFIC ................................ 13 FIGURE 13: IN-PERSON SHOPPING IN THE AMERICAS .................................................................................. 14 FIGURE 14: IN-PERSON SHOPPING IN EMEA (1/2) ....................................................................................... 15 FIGURE 15: IN-PERSON SHOPPING IN EMEA (2/2) ....................................................................................... 15 FIGURE 16: IN-PERSON SHOPPING IN THE ASIA-PACIFIC.............................................................................. 16 FIGURE 17: ONLINE MERCHANT SECURITY IN THE AMERICAS ..................................................................... 17 FIGURE 18: ONLINE MERCHANT SECURITY IN EMEA (1/2) ........................................................................... 17 FIGURE 19: ONLINE MERCHANT SECURITY IN EMEA (2/2) ........................................................................... 18



3

FIGURE 20: ONLINE MERCHANT SECURITY IN THE ASIA-PACIFIC ................................................................. 18 FIGURE 21: SECURITY OF STORED DATA IN THE AMERICAS ......................................................................... 19 FIGURE 22: SECURITY OF STORED DATA IN EMEA (1/2) ............................................................................... 20 FIGURE 23: SECURITY OF STORED DATA IN EMEA (2/2) ............................................................................... 20 FIGURE 24: SECURITY OF STORED DATA IN THE ASIA-PACIFIC ..................................................................... 21 FIGURE 25: GREATEST FRAUD RISKS IN THE AMERICAS ............................................................................... 22 FIGURE 26: GREATEST FRAUD RISK IN EMEA (1/2) ....................................................................................... 23 FIGURE 27: GREATEST FRAUD RISK IN EMEA (2/2) ....................................................................................... 24 FIGURE 28: GREATEST FRAUD RISK IN THE ASIA-PACIFIC ............................................................................. 25 FIGURE 29: PERCEPTION OF GOVERNMENTS AND LAW ENFORCEMENT IN THE AMERICAS ....................... 26 FIGURE 30: PERCEPTION OF GOVERNMENTS AND LAW ENFORCEMENT IN EMEA (1/2) ............................. 27 FIGURE 31: PERCEPTION OF GOVERNMENTS AND LAW ENFORCEMENT IN EMEA (2/2) ............................. 27 FIGURE 32: PERCEPTION OF GOVERNMENTS AND LAW ENFORCEMENT IN THE ASIA-PACIFIC ................... 28 FIGURE 33: BEST DATA PROTECTOR IN THE AMERICAS ............................................................................... 29 FIGURE 34: BEST DATA PROTECTOR IN EMEA (1/2) ..................................................................................... 30 FIGURE 35: BEST DATA PROTECTOR IN EMEA (2/2) ..................................................................................... 31 FIGURE 36: BEST DATA PROTECTOR IN THE ASIA-PACIFIC ........................................................................... 32 FIGURE 37: FRAUD EDUCATION IN THE AMERICAS ...................................................................................... 33 FIGURE 38: FRAUD EDUCATION IN EMEA (1/2) ............................................................................................ 33 FIGURE 39: FRAUD EDUCATION IN EMEA (2/2) ............................................................................................ 34 FIGURE 40: FRAUD EDUCATION IN THE ASIA-PACIFIC .................................................................................. 34 FIGURE 41: ACTIONS FOLLOWING SUSPICIOUS ACTIVITY IN THE AMERICAS ............................................... 35 FIGURE 42: ACTIONS FOLLOWING SUSPICIOUS ACTIVITY IN EMEA (1/2) .................................................... 36 FIGURE 43: ACTIONS FOLLOWING SUSPICIOUS ACTIVITY IN EMEA (2/2) .................................................... 36 FIGURE 44: ACTIONS FOLLOWING SUSPICIOUS ACTIVITY IN THE ASIA-PACIFIC ........................................... 37 FIGURE 45: CONTACT PREFERENCES IN THE AMERICAS ............................................................................... 38 FIGURE 46: CONTACT PREFERENCES IN EMEA (1/2) .................................................................................... 39 FIGURE 47: CONTACT PREFERENCES IN EMEA (2/2) .................................................................................... 40 FIGURE 48: CONTACT PREFERENCES IN THE ASIA-PACIFIC ........................................................................... 41



4

IMPACT POINTS x This Impact Report, based on a Q1 2014 ACI Worldwide study of 6,159

consumers in 20 countries, provides an overview of respondents' attitudes toward various types of financial fraud and discusses the actions they may take subsequent to a fraud experience. Where applicable, it also compares these results with those from similar ACI surveys in 2011 and 2012.

x Twenty-nine percent of global consumers do not trust firms (e.g., stores, online shopping sites, restaurants, etc.) to protect stored personal and financial data against hacking attempts and data breaches.

x Only 55% of consumers feel the stores where they shop use security systems that adequately protect their financial data against hackers and data breaches, while 62% of consumers feel that online shopping websites adequately protect their personal and financial information.

x In many countries, prepaid card usage and the rate of fraud on such cards correlates. China and India have the highest rates of prepaid card fraud at 17% and 18%, respectively, and very high consumer use rates at 93% and 91%, respectively. Conversely, in countries with use rates of 70% or less, such as Australia, Canada, New Zealand, and the United States, fraud rates are 4% or less, indicating that the fraud rate may rise as more consumers use prepaid cards.

x Thirty-two percent of global consumers think theft by a computer hacker is the greatest fraud risk.

x Thirty-one percent of global consumers think governments and law enforcement agencies are doing a "very bad" or "poor" job of fighting fraud.

x Fifty-eight percent of global consumers think financial institutions (large multinational institutions, community banks, and credit unions) do a better job of protecting their data than do retailers or restaurants, large chain stores, or government agencies and law enforcement.

x Seventy-seven percent of global consumers are “very interested” in being contacted about suspicious activity on their cards or accounts via a phone call, email, or text message.

x Seventy-three percent of global consumers prefer that their bank not post transactions to their card until they respond to a fraud alert.

x Forty-two percent of global consumers don't recall receiving any anti-fraud information from their financial institution.



5

INTRODUCTION Consumers are overwhelmed and disheartened with news of data breaches, hacking attacks, and fraud activity, but they are resilient and willing to engage with financial institutions in the battle to protect their financial activity and accounts. In the first report in this two-part series, we saw that consumers have lost confidence in financial institutions' ability to protect them completely from fraud, and we examined their back-of-wallet behavior after experiencing fraud or receiving a new card due to a data breach.1

In the second Impact Report in this two-part series, we explore prepaid card use and fraud rates will in detail along with mobile wallet adoption rates. Consumer confidence has been shaken by ongoing data breaches to the extent that they are no longer confident that retailers use security systems that adequately protect their data when they shop in stores or when the retailers store their personal and financial data. Despite all the discouraging news on the fraud front, many consumers are still willing to work with their financial institutions and engage in fraud-prevention efforts.

METHODOLOGY ACI Worldwide, a global leader in electronic payments for financial institutions, retailers, and processors, conducted online quantitative market research in March 2014 and surveyed 6,159 consumers. The study was conducted in a total of 20 countries in the following regions:

x The Americas (North and South America): Brazil, Canada, Mexico, and the United States

x EMEA (Europe, the Middle East, and Africa): France, Germany, Italy, the Netherlands, Poland, Russia, South Africa, Sweden, the United Arab Emirates, and the United Kingdom

x The Asia-Pacific: Australia, China, India, Indonesia, New Zealand, and Singapore

In total, 6,159 consumers were included in the research: approximately 300 consumers, divided equally between men and women, participated in each of the 20 countries. Of the total, 6,041 own one or more type of payment card (i.e., credit card, debit card, prepaid card). This is the fourth time that ACI has fielded this type of survey, and some comparative results are included for the past two studies.

In each country, the data have a margin of error of approximately 5 points. Statistical tests of significance, where shown, were conducted at the 95% level of confidence.

1. See Aite Group's report Global Consumers: Losing Confidence in the Battle Against Fraud, June 2014.

http://www.aitegroup.com/report/global-consumers-losing-confidence-battle-against-fraud



6

PREPAID CARDS AND FRAUD The payments landscape is constantly evolving with the arrival of new payment vehicles and payment processors such as Square, GoPago, and LevelUp. Consumers may be confused, particularly as the United States rolls out EMV cards; some consumers will have a PIN associated with their credit card for the first time. Consumer confusion often translates to new opportunities for fraudsters, so financial institutions should devise a sound communication strategy for their customer bases as these changes take place.

The first report in this series documents that prepaid cards have much lower fraud rates than debit or credit cards, and fraud rates for these cards are relatively flat in most countries. Indonesia saw the greatest growth in prepaid fraud as it increased from 4% to 11% between Q3 2012 and Q1 2014 (Figure 1).

Figure 1: Prepaid Card Fraud Rate Comparison by Country

Source: Aite Group, ACI Worldwide study of consumers in 20 countries, Q1 2014 and in 17 countries, Q3 2012

1%

1%

2%

2%

2%

3%

3%

3%

3%

4%

6%

7%

7%

7%

9%

10%

10%

11%

17%

18%

2%

1%

1%

3%

3%

4%

5%

3%

2%

10%

7%

6%

6%

9%

4%

16%

19%

New Zealand

Canada

United Kingdom

The Netherlands

Sweden

Germany

South Africa

United States

France

Australia

Poland

Mexico

Brazil

Russia

UAE

Singapore

Italy

Indonesia

China

India

Prepaid Card Fraud Rates, 2012 to 2014 (Where data is available)

2012 (n=5,114)

2014 (n=6,041)



7

As a relatively new payment method, usage rates vary by country. In most countries, there is a correlation between the percentage of consumers who use prepaid cards and the rate at which consumers experience fraud on the cards; this indicates that as more consumers use the cards in a country, the fraud rate is likely to rise in that country.

One additional type of prepaid card fraud involves merchants unknowingly accepting unauthorized debit or credit card payments for the prepaid card sale. Organized fraud rings are hitting merchants across the United States, often buying large numbers of prepaid cards. This type of prepaid card fraud usually results in a great deal of manual effort for the merchant (primarily in researching transactions and signed receipts when disputes occur) as well as large losses for card issuers. Consumers may not recognize this as prepaid fraud, however, since the consumer will only be aware of the fraud on the debit or credit card that was used to pay for the prepaid card at the merchant location.

In the Americas, both Brazil and Mexico have higher percentages of consumers who own prepaid cards (82% and 83%, respectively) than in Canada (67%) or the United States (64%), and consumers there experience a higher rate of fraud—6% to 7%. While fraud rates are relatively low in all countries in the Americas, fraud rates are significantly higher in Brazil and Mexico than in Canada. Issuers can anticipate higher fraud rates as more consumers use the cards (Figure 2).

Figure 2: Prepaid Card Usage Compared to Fraud Experienced in the Americas


In surveyed countries in EMEA, Italy has the largest percentage of the population using prepaid cards at 93% and is tied with the UAE for the highest rate of prepaid card fraud at 10%. The UAE has only 81% of consumers using prepaid cards, but the debit and credit card rates in the country are also among the highest of all the countries surveyed. Sweden is an exception to the correlation of high prepaid card usage to high rates of fraud; 91% of consumers use the cards, with only a 2% card fraud rate. Sweden ranks very low in card fraud rates across the board, however. Poland has the third-highest consumer use rate at 83% and the fourth-highest rate of

6%1%

7% 3%

82%

67%

83%

64%

Brazil(n=285)

Canada(n=304)

Mexico(n=290)


Comparison of Prepaid Card Ownership to Rate of Fraud

Prepaid fraud experienced Respondents with prepaid cards



8

fraud at 6%. The United Kingdom has the lowest usage of prepaid cards at 61% and is tied for the lowest fraud rate at 2% (Figure 3).

Figure 3: Prepaid Card Usage and Fraud Experienced in EMEA


In the Asia-Pacific, the two countries with the highest global prepaid card fraud rates are India at 18% and China at 17%. Both countries have very high use rates of prepaid cards with 93% of consumers in China using the cards and 91% using them in India. Australia and New Zealand have the lowest use rates of prepaid cards at 69% and 70%, respectively, and also the lowest rates of fraud at 4% and 1%, respectively (Figure 4).

Figure 4: Prepaid Card Usage and Fraud Experienced in the Asia-Pacific


3% 2%10%

3% 6% 7% 3% 2%10%

2%

73%81%

93%

76%83% 81% 80%

91%81%

61%

Fran

ce(n

=300

)

Ger

man

y(n

=299

)

Italy

(n

=308

)

The

Net

herla

nds

(n=3

04)

Pola

nd(n

=302

)

Rus

sia

(n=3

08)

Sout

h Af

rica

(n=3

14)

Swed

en(n

=301

)

UAE

(n=3

18)

Uni

ted

King

dom

(n=3

10)


Prepaid fraud experienced Respondents with prepaid cards

4%

17% 18%11%

1%10%

69%

93% 91% 89%

70%

84%

Australia(n=308)

China(n=299)

India(n=303)

Indonesia(n=317)

New Zealand(n=308)

Singapore(n=306)


Prepaid fraud experienced Respondents with prepaid cars



9

THE RISE OF THE MOBILE CHANNEL As payments systems evolve and more consumers use smartphones and tablets, the desire to make receiving and making payments more convenient becomes stronger. Consumers always have their smartphones with them and could stop carrying wallets or purses with physical cards if they could use their smartphones for online banking and mobile payments. Adoption rates of mobile wallets vary widely around the world, and countries with less developed banking systems tend to have the heaviest adoption rates to date.

Adoption of mobile wallets in the Americas is lowest among all the global regions, although Mexico has seen 9% growth in adoption over the past 18 months. One out of every five consumers in Mexico is now using a mobile wallet, and Brazil follows close behind with 19% adoption. Time will tell if mobile wallets will ever see widespread adoption in the United States and Canada (Figure 5).

Figure 5: Mobile Wallet Adoption in the Americas


About one in five consumers is using mobile wallets in Italy, Poland, South Africa, and the UAE. Consumers in Russia have adopted mobile wallets much more aggressively, with 44% currently using them (Figure 6 and Figure 7).

16%

4%11%

7%

19%

4%

20%

6%

Brazil(2012, n=289) (2014, n=300)

Canada(2012, n=302) (2014, n=304)

Mexico(2012, n=286) (2014, n=307)

United States(2012, n=305) (2014, n=311)

Consumer Use of Mobile Wallet, 2012 and 2014

2012 2014



10

Figure 6: Mobile Wallet Adoption in EMEA (1/2)


Figure 7: Mobile Wallet Adoption in EMEA (2/2)


Some countries in the Asia-Pacific region see the highest adoption rates of mobile wallets by far. Three countries had high adoption rates in 2012 and have seen very strong growth in mobile rate adoption since: adoption in China is at 72% (up from 47% in 2012); adoption in India is at 47% (up from 34% in 2012); and adoption in Indonesia is at 32% (up from 25% in 2012). In addition, 23% of consumers in Singapore have adopted mobile wallets, although this rate is flat compared to 2012 (Figure 8).

7% 8%

18%

6%10%

6%

22%

9%

19%

France(2012, n=298) (2014, n=300)

Germany(2012, n=297) (2014,n=299)

Italy(2012, n=297) (2014, n=308)

The Netherlands(2012, n=297) (2014, n=308)

Poland(2014, n=302)


2012 2014

17% 15%

26%

8%

44%

19%14%

24%

6%

Russia(2014, n=308)

South Africa(2012, n=301) (2014, n=314)

Sweden(2012, n=303) (2014, n=301)

UAE(2012, n=312) (2014, n=318)

United Kingdom(2012, n=308) (2014, n=310)


2012 2014



11

Figure 8: Mobile Wallet Adoption in the Asia-Pacific


Consumer perceptions of mobile wallet security vary widely across the countries of the Americas. In Brazil, where 71% of the consumers who have mobile wallets believe the data on the device is at least somewhat secure, consumer perceptions of security are practically unchanged over the past 18 months. In Canada, Mexico, and the United States, consumers' perceptions of security have strengthened since the 2012 study. Currently, 90% of consumers in Canada, 91% of consumers in Mexico, and 100% of consumers in the United States believe that data on mobile devices is at least "somewhat secure" (Figure 9). Since consumers consider these devices to be secure but admit to not locking their smartphones when they are not in use, financial institutions should take note and carefully screen activity in the mobile channel for suspicious transactions.

5%

47%

34%25% 23%

8%

72%

47%

32%

11%

23%

Australia(2012, n=311) (2014, n=310)

China(2012, n=296) (2014, n=302)

India(2012, n=295) (2014, n=310)

Indonesia(2012, n=272) (2014, n=330)

New Zealand(2014, n=310)

Singapore(2012, n=294) (2014, n=311)


2012 2014



12

Figure 9: Perceptions of Mobile Wallet Data Security in the Americas


EMEA consumers' perceptions of mobile wallet security did not change as much as they did among consumers in the Americas region during the past 18 months. While percentages shifted in many countries between the "secure" and "somewhat secure" categories, the overall percentage of consumers who use mobile wallets and who feel the technology is at least somewhat secure remains very similar between the two studies (Figure 10 and Figure 11).

Figure 10: Perceptions of Mobile Wallet Data Security in EMEA (1/2)


21% 21%

55%45%

31%39%

32%

44%54% 50%

27%

45% 41%52% 55% 56%

17% 21% 18%9%

28%

8%14%

8% 7%2%

Brazil 2012

(n=48)

Brazil 2014

(n=56)

Canada 2012

(n=11)

Canada 2014

(n=11)

Mexico 2012

(n=32)

Mexico 2014

(n=62)

United States 2012

(n=22)

United States 2014

(n=18)

Q. How secure do you think the information on your phone or tablet is?

Secure—I trust the bank to protect my personal information

Somewhat secure—I realize this is a new technology, but I like the convenience, so I use it

Unsure—I don't know what the bank does to protect my card or bank information on the mobile device

36%42%

24%37%

22%18%

12%

33% 28%

50%

32%

60%47% 52% 53%

65%56%

40%

9% 13% 8% 11%17%

25%18%

11%

28%

5% 13% 8% 5% 9% 4% 5% 0% 4%

France 2012

(n=22)

France2014

(n=31)

Germany2012

(n=25)

Germany2014

(n=19)

Italy2012

(n=54)

Italy2014

(n=68)

The Neth-erlands

2012(n=17)

The Neth-erlands

2014(n=25)

Poland2014

(n=57)


Secure—I trust the bank to protect my personal information

Somewhat secure—I realize this is a new technology, but I like the convenience, so I use it

Unsure—I don't know what the bank does to protect my card or bank information on the mobile device

Not secure



13

Figure 11: Perceptions of Mobile Wallet Data Security in EMEA (2/2)


Consumer perceptions of mobile wallet security in Australia improved since the 2012 study but remained very similar in all other countries of the Asia-Pacific over the past 18 months. New Zealand was added in the 2014 study, and 83% of consumers in that country who have a mobile wallet feel data on their mobile devices is at least somewhat secure. Although mobile wallets enjoy high adoption rates in China, 34% of consumers are unsure if data stored on the device is secure (Figure 12).

Figure 12: Perceptions of Mobile Wallet Data Security in the Asia-Pacific


8%

33% 36%19% 19%

33%25% 25%

44%49% 35% 39%64%

50% 44%62%

50%33%

28% 25% 20%15% 21% 20%

11%25% 22%15% 8% 5% 2% 10% 3% 3%

Russia 2014

South Africa 2012

South Africa 2014

Sweden 2012

Sweden 2014

UAE 2012

UAE 2014

United Kingdom

2012

United Kingdom

2014

(n=134) (n=52) (n=61) (n=47) (n=42) (n=82) (n=76) (n=24) (n=18)


Secure—I trust the bank to protect my personal informationSomewhat secure—I realize this is a new technology, but I like the convenience, so I use itUnsure—I don't know what the bank does to protect my card or bank information on the mobile deviceNot secure

44%

23%20% 12%

53% 54%

34% 31%21% 22%

29%31%

58%46% 50%

37% 39%47% 51%

62% 61%

48%

6%

19%31% 34%

8% 5%16% 17% 18% 13%

22%19%

3% 3% 2% 2% 3% 1% 4% 1%

Aus-tralia2012

(n=16)

Aus-tralia2014

(n=26)

China2012

(n=149)

China2014

(n=218)

India2012

(n=106)

India2014

(n=145)

Indo-nesia2012

(n=76)

Indo-nesia2014

(n=106)

New Zealand

2014(n=34)

Singa-pore2012

(n=69)

Singa-pore2014

(n=73)


Secure—I trust the bank to protect my personal informationSomewhat secure—I realize this is a new technology, but I like the convenience, so I use itUnsure—I don't know what the bank does to protect my card or bank information on the mobile deviceNot secure



14

RETAILERS A new area of focus for the 2014 survey is consumer attitudes toward physical and online retailers and whether they think the security systems retailers use are adequate to protect consumers' data. Around the globe, hackers are stealing consumer data through data breaches so they can take over consumer accounts, create counterfeit cards, and engage in other nefarious acts. Consumers hear about these events on the news and, in some countries, may receive notifications from various entities when their data has been breached. Often, consumers are uncertain what to do after receiving such notifications.

IN-PERSON SHOPPING In some countries across all regions surveyed, consumers display very little confidence that the stores where they shop use adequate security systems to protect their information. Improving customer confidence in payments security could increase merchant retail sales and improve card issuer revenue.

Consumers in the Americas are skeptical that stores where they shop in person use security systems that are adequate to protect their card or account information. Fully 50% of consumers in Brazil indicate they do not think most of the stores where they shop use adequate security systems, along with 49% of consumers in Mexico, 35% of consumers in the United States, and 33% of consumers in Canada. This level of concern related to shopping in stores is most likely related to data breaches at the point of sale that have been in the news repeatedly in recent years. Between 4% and 7% of consumers across the Americas countries indicate they do not use a card when shopping in stores (Figure 13).

Figure 13: In-Person Shopping in the Americas


45%

60%

45%

62%50%

33%

49%

35%

5% 7% 6% 4%

Brazil(n=300)

Canada(n=304)

Mexico(n=307)


Q. Do you think most of the stores where you shop in person use security systems that are able to protect your card/account information

when you shop?

Yes No Don't use a card to pay when shopping in person



15

Similarly, consumers in some EMEA countries express concern over the security systems utilized by the stores where they shop in person. At least 40% of consumers in France, Germany, Italy, Russia, South Africa, and the UAE think the security systems in these stores are inadequate to protect their payment information. In Germany and Italy, 14% and 12% of consumers, respectively, don't use a card when shopping in stores. About two-thirds of consumers in Poland (65%), Sweden (67%), and the United Kingdom (68%) do think the security systems in stores where they shop is adequate to protect their information (Figure 14 and Figure 15).

Figure 14: In-Person Shopping in EMEA (1/2)


Figure 15: In-Person Shopping in EMEA (2/2)


54%45% 45%

56%65%

44% 40% 43%36% 31%

1%14% 12% 8% 5%

France(n=300)

Germany(n=299)

Italy (n=308)

The Netherlands(n=304)

Poland(n=302)


when you shop?


49%55%

67%

52%

68%

44% 44%

30%

46%

29%

7%2% 3% 2% 3%

Russia(n=308)

South Africa(n=314)

Sweden(n=301)

UAE(n=318)

United Kingdom(n=310)


when you shop?




16

In the Asia-Pacific region, many consumers have a similar lack of confidence with regard to security in the stores where they shop. In New Zealand (65%), India (62%) and Australia (55%), consumers have the highest rate of confidence that the stores where they shop have adequate security deployed to protect their card and account information. In all other countries in the region, less than half of consumers believe the security where they shop is adequate to protect their information (Figure 16).

Figure 16: In-Person Shopping in the Asia-Pacific


ONLINE SHOPPING Since consumers are so skeptical that the security systems used by retailers are adequate, we next look at consumers' perceptions of online security. Surprisingly, many consumers perceive that online merchants' security systems are able to protect their card and account information better than those of in-person retailers. To illustrate this point, 77% of U.S. consumers think the online sites where they shop use security systems that can protect their personal and financial information against hacking attacks, but only 62% have similar confidence in security systems in the stores where they shop.

In the Americas region, 77% of U.S. consumers, 63% of Canadians, and 62% of Brazilians indicate they believe the sites where they shop online use security systems that adequately protect their card and account information. Only 37% of Mexicans have similar confidence in the security of online sites. In Canada (23%) and Mexico (19%), we see double-digit percentages of consumers who do not shop online (Figure 17).

55% 48%62%

49%

65%

49%41%

48%

30%41%

32%

47%

5% 4% 8% 9%4% 4%

Australia(n=310)

China(n=302)

India(n=310)

Indonesia(n=330)

New Zealand(n=310)

Singapore(n=311)


when you shop?

Yes No Don't use a card when shopping in person



17

Figure 17: Online Merchant Security in the Americas


In EMEA, over half of consumers in every country have confidence that the security of online shopping sites is adequate to protect their personal and payment information; this confidence may be partially based on very stringent requirements in many of these countries for using multifactor authentications online.2 In most countries, 90% or more of consumers shop online; the exceptions are Poland (10%), Russia (12%), and South Africa (17%), where 10% or more of consumers do not shop online (Figure 18 and Figure 19).

Figure 18: Online Merchant Security in EMEA (1/2)


2. See Aite Group's report 3-D Secure: Poised to Live Long and Prosper, March 2013.

62% 63%

37%

77%

33%

14%

44%

19%

5%

23% 19%

4%

Brazil(n=300)

Canada(n=304)

Mexico(n=307)


Q. Do you think most sites where you shop online use security systems that are able to protect your card/account information when you shop?

Yes No Don't shop online

61%55%

62% 61% 59%

36% 41%29% 31% 31%

3% 4% 9% 9% 10%

France(n=300)

Germany(n=299)

Italy (n=308)


Poland(n=302)



http://www.aitegroup.com/report/3-d-secure-poised-live-long-and-prosper



18

Figure 19: Online Merchant Security in EMEA (2/2)


Consumers in the Asia-Pacific also have confidence in shopping websites' ability to protect their data adequately. Singapore (48%) is the only country where less than half of consumers indicate they have confidence in these security systems, and it is very close to half. Indonesia (13%) is the only country where more than 10% of consumers avoid shopping online (Figure 20).

Figure 20: Online Merchant Security in the Asia-Pacific


57% 58% 61% 64%75%

31%25%

32% 34%

20%12%

17%8%

2% 4%

Russia(n=308)

South Africa(n=314)

Sweden(n=301)

UAE(n=318)




66%72% 73%

50%

74%

48%

25% 28%21%

37%

18%

47%

9% 6%13%

8% 5%

Australia(n=310)

China(n=302)

India(n=310)

Indonesia(n=330)

New Zealand(n=310)

Singapore(n=311)


Yes No Don't use a card when shopping in person



19

STORED DATA Consumers do not perceive the data stored by online shopping sites, restaurants, etc., to be secure against hacking attempts and data breaches. This lack of consumer confidence could negatively impact electronic commerce and cause consumers to revert to cash, a very costly option for retailers.

Only 30% to 38% of consumers across all four countries in the Americas believe their stored data—personal and financial information—is secure. In Mexico, 42% of consumers indicate they do not believe such data is secure. In each of the other three countries, the largest segment (39% to 42%) of consumers are unsure whether their data is secure or not (Figure 21).

Figure 21: Security of Stored Data in the Americas


Across EMEA, consumers have similar uncertainty with regard to the security of data stored by various companies. Across all 10 countries, the highest percentage of consumers who felt stored data is secure is in the Netherlands, at 42%. Thirty-one percent to 45% of consumers in EMEA are unsure whether their stored data is secure (Figure 22 and Figure 23).

30%38%

32% 36%31%

20%

42%

24%

39% 42%

26%

40%

Brazil(n=300)

Canada(n=304)

Mexico(n=307)


Q. Do you trust firms (e.g., stores, online shopping sites, restaurants, etc.) to protect personal and financial data they have stored against

hacking attempts, data breaches, etc.?

Yes No Unsure



20

Figure 22: Security of Stored Data in EMEA (1/2)


Figure 23: Security of Stored Data in EMEA (2/2)


India stands out as the only country in this global study where over half of consumers feel confident that their stored data is safe against hacking attacks and data breaches. Consumers in the other Asia-Pacific countries are more similar to those in EMEA and in the Americas and are not confident that stored card and account information is adequately protected (Figure 24).

32%20%

34%42%

34%31%39%

21% 19%25%

36% 41% 44%38% 41%

France(n=300)

Germany(n=299)

Italy (n=308)


Poland(n=302)



Yes No Unsure

23% 28% 29% 33% 38%31% 33% 28%

36%23%

45%39% 43%

31%38%

Russia(n=308)

South Africa(n=314)

Sweden(n=301)

UAE(n=318)




Yes No Unsure



21

Figure 24: Security of Stored Data in the Asia-Pacific


29% 25%

54%

35% 39% 34%32% 34%23% 23% 20%

33%39% 41%

24%

42% 41%32%

Australia(n=310)

China(n=302)

India(n=310)

Indonesia(n=330)

New Zealand(n=310)

Singapore(n=311)



Yes No Unsure



22

CONSUMERS ARE CONCERNED AND WILLING TO ENGAGE IN BATTLING FRAUD Consumers are concerned about financial fraud and fear becoming fraud victims. They recognize that there are many dangers that could lead to fraud on their cards and accounts and that fraudsters attack their victims in many ways.

In the Americas, the largest group of consumers in three of the four countries believe the greatest fraud risk is theft by a computer hacker (over 30% each in Brazil, Canada, and the United States). Mexico is the only exception, where 20% of consumers believe shopping online represents the greatest fraud risk, 19% of consumers fear using a credit card to pay for purchases via telephone, and 19% fear theft by a computer hacker. The next highest concern in the Americas is filling out paper forms that require card or account information; between 16% and 18% of consumers in each country list this as the greatest fraud risk (Figure 25).

Figure 25: Greatest Fraud Risks in the Americas


9%

7%

6%

7%

8%

10%

37%

16%

20%

5%

5%

6%

19%

9%

19%

17%

14%

5%

7%

4%

12%

6%

34%

18%

16%

2%

4%

3%

14%

10%

33%

18%

Shopping online

Shopping in a store

Using my credit card on vacation while traveling away from home

Using my phone or tablet to shop and pay bills

Using my card information for purchases via the telephone

Theft by a trusted party (e.g., relative, wait staff, bank

employee)

Theft by computer hacker

Filling out paper forms that require card or account numbers

for payments or purchases

Q. Which of the following do you believe presents the greatest fraud risk?

Brazil (n=300)

Canada (n=304)

Mexico (n=307)




23

Similarly, across the countries of EMEA, the largest percentage of consumers believe theft by a computer hacker represents the greatest fraud risk; between 24% and 42% of consumers in each country choose this category. Filling out paper forms with card or account information is a big concern among consumers in a number of countries. The Netherlands is the only country where less than 13% of consumers think shopping online is the greatest fraud risk. Fifteen percent or more of consumers in Germany, the UAE, and Sweden think that using their card while traveling away from home on vacation is the greatest fraud risk (Figure 26 and Figure 27).

Figure 26: Greatest Fraud Risk in EMEA (1/2)


13%

2%

4%

7%

9%

10%

32%

23%

8%

4%

12%

7%

15%

6%

38%

11%

16%

3%

3%

3%

19%

6%

31%

20%

13%

4%

15%

8%

8%

3%

42%

8%

23%

3%

3%

5%

10%

6%

29%

22%

Shopping online

Shopping in a store

Using my credit card on vacation while traveling

away from home

Using my phone or tablet to shop and pay

bills

Using my card information for

purchases via the telephone

Theft by a trusted party (e.g., relative, wait staff,

bank employee)


Filling out paper forms that require card or account numbers for

payments or purchases


France (n=300)

Germany (n=299)

Italy (n=308)


Poland (n=302)



24

Figure 27: Greatest Fraud Risk in EMEA (2/2)


In the countries of the Asia-Pacific, the largest group of consumers in each country—28% to 51%—think theft by a computer hacker is the greatest risk of fraud. This is followed by shopping online; 16% to 20% of consumers in every country rank shopping online as the second-greatest risk except in China, where only 8% of consumers see this as the greatest risk. Ten percent to 15% of consumers in every country in the Asia-Pacific see filling out paper forms with card and account numbers as the greatest fraud risk (Figure 28).

13%

5%

12%

10%

13%

8%

24%

16%

15%

5%

15%

4%

10%

8%

30%

14%

18%

4%

16%

3%

13%

9%

26%

13%

16%

5%

2%

2%

16%

15%

25%

19%

15%

2%

5%

6%

10%

8%

31%

23%

Shopping online

Shopping in a store

Using my credit card on vacation while

traveling away from home


bills



Theft by a trusted party (e.g., relative, wait

staff, bank employee)


Filling out paper forms that require card or account numbers for

payments or purchases


Russia (n=308)


Sweden (n=301)

UAE (n=318)




25

Figure 28: Greatest Fraud Risk in the Asia-Pacific


Global consumers' opinions of how well governments and law enforcement are fighting fraud differ. The largest percentages of consumers in the United States and Canada think governments are doing an average job of fighting fraud, while the largest groups of consumers in Brazil and Mexico think they are doing a poor job. Brazil is the only country where any consumers feel these entities are doing an excellent job, and only 1% do so (Figure 29).

17%

2%

14%

5%

10%

9%

30%

14%

19%

2%

7%

5%

14%

9%

29%

15%

20%

2%

1%

2%

15%

16%

32%

12%

17%

6%

5%

6%

11%

10%

31%

15%

8%

1%

4%

8%

4%

14%

51%

10%

16%

3%

13%

5%

15%

6%

28%

15%

Shopping online

Shopping in a store

Using my credit card on vacation while traveling

away from home


bills



Theft by a trusted party (e.g., relative, wait staff,

bank employee)


Filling out paper forms that require card or

account numbers for payments or purchases


Australia (n=310)

China (n=302)

India (n=310)

Indonesia (n=330)

New Zealand (n=310)

Singapore (n=311)



26

Figure 29: Perception of Governments and Law Enforcement in the Americas


In all 10 surveyed countries of EMEA, consumers think governments and law enforcement are doing only an average job of fighting fraud. In nine of the 10 countries, the second-largest group of consumers feel governments and law enforcement are doing a poor job of fighting fraud; the only exception is the UAE, where the second-largest group of consumers feel these entities are doing a good job (Figure 30 and Figure 31).

22%

9%

19%

10%

36%

14%

40%

28%

31%

58%

32%

47%

11%

20%

9%

15%

1%

(n=300)

(n=304)

(n=307)

(n=311)Br

azil

Can

ada

Mex

ico

Uni

ted

Stat

es

Q. How good a job do you believe governments and law enforcement are doing at fighting card or account fraud?

ExcellentGoodAveragePoorVery bad



27

Figure 30: Perception of Governments and Law Enforcement in EMEA (1/2)


Figure 31: Perception of Governments and Law Enforcement in EMEA (2/2)


12%

10%

8%

5%

5%

24%

20%

26%

16%

23%

55%

64%

52%

64%

61%

9%

6%

14%

13%

11%

1%

2%

1%

(n=300)

(n=299)

(n=308)

(n=304)

(n=302)Fr

ance

Ger

man

yIta

ly

The

Net

herla

nds

Pola

nd


Excellent

Good

Average

Poor

Very bad

12%

20%

14%

3%

5%

20%

36%

24%

11%

21%

53%

40%

49%

53%

58%

14%

4%

13%

28%

15%

1%

1%

5%

(n=308)

(n=314)

(n=301)

(n=318)

(n=310)

Rus

sia

Sout

h Af

rica

Swed

enU

AEU

nite

d Ki

ngdo

m


Excellent

Good

Average

Poor

Very bad



28

As in EMEA, the largest group of consumers in each of the Asia-Pacific countries feel governments and law enforcement are doing only an average job of fighting fraud. In the Asia-Pacific, however, the second-largest group of consumers in five countries—Australia, China, India, New Zealand, and Singapore—think these entities are doing a good job. The lone exception is Indonesia, where 27% of consumers feel these entities are doing a poor job of fighting fraud (Figure 32).

Figure 32: Perception of Governments and Law Enforcement in the Asia-Pacific


PROTECTING CARD AND ACCOUNT INFORMATION Consumers in three of the four countries in the Americas believe large, multinational financial institutions do the best job of protecting their financial account information; 48% to 58% of consumers in Brazil, Canada, and Mexico believe this to be true. In the United States, 46% of consumers believe community banks and credit unions do the best job of protecting this type of information. Clearly, across the Americas, consumers trust financial institutions to protect this information better than small retailers or restaurants, large chain stores, or governmental agencies (Figure 33).

2%

11%

9%

11%

2%

4%

10%

20%

15%

27%

13%

4%

57%

55%

47%

52%

61%

57%

29%

15%

24%

8%

23%

33%

1%

5%

2%

1%

2%

(n=310)

(n=302)

(n=310)

(n=330)

(n=310)

(n=311)

Aust

ralia

Chi

naIn

dia

Indo

nesia

New

Ze

alan

dSi

ngap

ore


Excellent

Good

Average

Poor

Very bad



29

Figure 33: Best Data Protector in the Americas


Thirty percent to 56% of consumers in every country of EMEA trust large multinational financial institutions to protect their information, with the exception of Sweden, where only 18% of consumers chose this category. Thirty-four percent of consumers in Sweden chose community banks or credit unions as the category most likely to protect their financial information. Consumers in EMEA also rate governmental agencies and law enforcement highly in terms of protecting their financial information; over 20% of consumers in every country except South Africa (6%) and the United Kingdom (19%) feel these agencies do the best job of protecting financial information. The category rated the lowest in terms of protecting this data is small retailers/stores and restaurants; Germany rated this category highest at 12% (Figure 34 and Figure 35).

29%

5%

46%

9%

11%

58%

14%

8%

6%

14%

52%

4%

23%

2%

19%

48%

14%

14%

8%

16%

Large/Multinational financial institutions

Large chain stores

Community banks or credit unions

Small retailers/stores or small restaurants

Governmental bodies and/or law

enforcement

Q. In your opinion, which of the following does the best job of protecting your card(s) or account information from fraud?

Brazil (n=300)

Canada (n=304)

Mexico (n=307)




30

Figure 34: Best Data Protector in EMEA (1/2)


34%

8%

14%

7%

37%

41%

7%

21%

6%

25%

45%

12%

16%

6%

21%

30%

10%

25%

12%

23%

38%

6%

20%

6%

29%


Large chain stores




enforcement


France (n=300)

Germany (n=299)

Italy (n=308)


Poland (n=302)



31

Figure 35: Best Data Protector in EMEA (2/2)


In the Asia-Pacific countries, the top two groups consumers feel do the best job of protecting their card and account information are large multinational financial institutions, and governmental agencies and law enforcement. The majority of consumers in every country viewed these two groups as better at data protection than smaller financial institutions, small retailers and restaurants, or large chain stores (Figure 36).

49%

13%

11%

9%

19%

41%

11%

7%

6%

36%

18%

13%

34%

5%

30%

56%

12%

17%

9%

6%

41%

4%

2%

2%

51%


Large chain stores




enforcement


Russia (n=308)


Sweden (n=301)

UAE (n=318)




32

Figure 36: Best Data Protector in the Asia-Pacific


FRAUD EDUCATION Educating consumers about fraud and how to protect themselves against it is important in the battle against organized fraudsters. While many financial institutions often collaborate with other financial institutions—literally the "good guys" against the "bad guys"—they miss the vital resource of their own customers. Communication and education are two critical steps financial institutions can perform better, and an enlightened customer base should yield fewer successful fraud opportunities.

The majority of consumers in Brazil, Canada, and Mexico don't recall receiving any information from their financial institutions educating them about ways to protect themselves from fraud. Likewise, in the United States, the largest segment of consumers—44%—do not recall having received such information (Figure 37).

26%

7%

7%

5%

54%

49%

3%

18%

5%

26%

58%

4%

8%

5%

25%

35%

14%

14%

7%

30%

43%

10%

5%

2%

40%

45%

6%

21%

3%

25%


Large chain stores




enforcement


Australia (n=310)

China (n=302)

India (n=310)

Indonesia (n=330)

New Zealand (n=310)

Singapore (n=311)



33

Figure 37: Fraud Education in the Americas


The largest segments of consumers in eight of the 10 EMEA countries do not recall having received information from their financial institutions about how to protect themselves against fraud. In the two exceptions—South Africa and the UAE—the largest groups of consumers indicate they have received emails from their financial institutions containing fraud information (Figure 38 and Figure 39).

Figure 38: Fraud Education in EMEA (1/2)


14% 11%19%

52%

4%13% 10%

19%

54%

4%

21%

7%13%

55%

3%

18% 21%11%

44%

5%

Yes, I've received email from them with anti-fraud information

Yes, I've received mail from them with anti-

fraud information

Yes, I've seen this on my financial

institution's website

Don't recall receiving any anti-fraud

information from my financial institution

Not applicable

Q. Has your financial institution provided any guidance or tips for anti-fraud?

Brazil (n=300) Canada (n=304) Mexico (n=307) United States (n=311)

12% 11%

23%

47%

7%15%

12%19%

42%

13%

17%

10%19%

49%

5%16%

10%

30%36%

9%12%21%

28%35%

4%



fraud information





Not applicable


France (n=300) Germany (n=299) Italy (n=308) The Netherlands (n=304) Poland (n=302)



34

Figure 39: Fraud Education in EMEA (2/2)


As in the Americas and EMEA, the largest groups of consumers in the Asia-Pacific countries indicate they have not received information pertaining to fraud from their financial institutions. The sole exception is India, where 53% of consumers indicate they have received emails containing fraud information (Figure 40).

Figure 40: Fraud Education in the Asia-Pacific

Source: Aite Group, ACI Worldwide study of consumers in 20 countries, Q1 2014:

18%8%

18%

53%

4%

42%

9%

24%24%

2%9% 6%

22%

57%

6%

49%

14% 14%21%

2%

19% 19% 17%

41%

3%



fraud information





Not applicable


Russia (n=308) South Africa (n=314) Sweden (n=301) UAE (n=318) United Kingdom (n=310)

18% 24%15%

41%

2%

16%11%

24%

44%

5%

53%

14% 15% 14%5%

29%

13%18%

37%

3%12%

12%21%

55%

%

20%17% 13%

46%

4%

Yes, I've received email from them with anti-

fraud information


fraud information

Yes, I've seen this on my financial institution's

website



Not applicable


Australia (n=310) China (n=302) India (n=310) Indonesia (n=330) New Zealand (n=310) Singapore (n=311)



35

Global consumers have definite opinions related to the actions they prefer their financial institution take in the event suspicious transactions take place on their card or account. In the Americas, the majority of consumers prefer their financial institution not allow any transactions until they respond to an alert, although a quarter of consumers in Canada and the United States prefer the financial institution continue to allow transactions consistent with the past history on the account (Figure 41).

Figure 41: Actions Following Suspicious Activity in the Americas


In EMEA, the majority of consumers in all countries prefer that the financial institution not allow any transactions until they respond to a fraud alert. Similar to some countries in the Americas, at least 24% of consumers in France, Germany, the Netherlands, Poland, the UAE, and the United Kingdom prefer that the financial institution allow account activity that is similar to past history (Figure 42 and Figure 43).

88%

73%

87%

63%

9%

25%

11%

29%

3%

3%

2%

8%

(n=300)

(n=304)

(n=307)

(n=311)

Braz

ilC

anad

aM

exic

oU

nite

d St

ates

Q. If you were to receive an alert or notification about fraud activity from your financial institution, what action would you prefer?

Bank allows all activity unless I notify them otherwise

Bank continues to allow transactions consistent with my past history from places where I have used the account

Bank does not allow any transactions until I respond to alert



36

Figure 42: Actions Following Suspicious Activity in EMEA (1/2)


Figure 43: Actions Following Suspicious Activity in EMEA (2/2)


In the Asia-Pacific, at least 65% of consumers in every country prefer that their bank not allow any transactions until they respond to a fraud alert. At least 24% of consumers in Australia, India, and New Zealand prefer their bank continue to allow transactions similar to those that have historically been posted to the account (Figure 44).

64%

64%

87%

70%

70%

29%

33%

10%

24%

27%

7%

3%

3%

6%

4%

(n=300)

(n=299)

(n=308)

(n=304)

(n=302)

Fran

ceG

erm

any

Italy

Th

e N

ethe

rland

sPo

land





77%

81%

78%

62%

62%

13%

15%

20%

31%

35%

10%

4%

2%

7%

3%

(n=308)

(n=314)

(n=301)

(n=318)

(n=310)

Rus

sia

Sout

h Af

rica

Swed

enU

AEU

nite

d Ki

ngdo

m







37

Figure 44: Actions Following Suspicious Activity in the Asia-Pacific


Since the majority of consumers in all 20 countries surveyed indicate they prefer their bank not allow additional activity on their account until they respond to an alert, it is important to understand consumers' preferred ways of being contacted. Several ways of contacting consumers allow rapid responses (e.g., a call, email, or text sent to a mobile device). Many consumers indicate they are very interested in potential contact via a number of methods. Indeed, the most important point is to enlist consumers in the battle against fraud and contact them when suspicious activity is identified on a card or account.

Consumers in the Americas are interested in being contacted in a variety of ways. In Brazil, most consumers are very interested in a call to their cell phone (67%) or a text message (62%). The largest group of consumers in Canada are very interested in a call to their home phone (67%). Eighty-two percent of consumers in Mexico are very interested in a call to their mobile phone. In the United States, 51% to 54% of consumers are very interested in receiving an email or a call to their mobile or home phone (Figure 45).

70%

83%

68%

75%

65%

71%

27%

14%

24%

14%

32%

19%

3%

3%

8%

11%

3%

10%

(n=310)

(n=302)

(n=310)

(n=330)

(n=310)

(n=311)Au

stra

liaC

hina

Indi

aIn

done

siaN

ew

Zeal

and

Sing

apor

e







38

Figure 45: Contact Preferences in the Americas


Consumers in EMEA are also very interested in being contacted in a variety of ways. The largest percentage of consumers in France (71%), Italy (74%),Poland (69%), South Africa (76%), and Sweden (58%) are very interested in being contacted on their mobile phone. In the Netherlands, 49% of consumers are very interested in receiving an email notification when suspicious activity is detected on an account, as are 50% of consumers in Germany. In the United Kingdom, an equal percentage of consumers—46%—are very interested in receiving a call on their mobile phone or home phone. In the UAE (75%), South Africa (75%), and Russia (77%), the majority of consumers are very interested in being contacted via text message (Figure 46 and Figure 47).

28%

51%

52%

54%

38%

10%

21%

64%

66%

82%

69%

3%

23%

47%

67%

37%

18%

9%

17%

48%

46%

67%

62%

5%

Send a letter

Send an email

Call your home (landline) phone

Call your cell/mobile

phone

Send a text message (SMS)

None; decline the transaction

Q. If your bank noticed unusual activity on your bank account or card, and you could be notified prior to the bank taking action , what action are

you very interested in your bank taking?

Brazil (n=300)

Canada (n=304)

Mexico (n=307)




39

Figure 46: Contact Preferences in EMEA (1/2)


18%

48%

25%

69%

61%

3%

31%

49%

41%

39%

34%

12%

24%

52%

46%

74%

71%

4%

26%

50%

47%

48%

39%

4%

25%

64%

54%

71%

67%

3%

Send a letter

Send an email


Call your cell/mobile phone





France (n=300)

Germany (n=299)

Italy (n=308)


Poland (n=302)



40

Figure 47: Contact Preferences in EMEA (2/2)


In the Asia-Pacific, 69% of consumers in Singapore are very interested in being contacted via text message regarding suspicious activity on an account. In all other countries of the Asia-Pacific, the largest percentage of consumers are very interested in a call to a mobile phone (Figure 48).

21%

44%

46%

46%

45%

6%

13%

48%

30%

71%

75%

4%

22%

53%

35%

58%

57%

16%

17%

52%

44%

76%

75%

6%

22%

51%

34%

71%

77%

2%

Send a letter

Send an email







Russia (n=308)


Sweden (n=301)

UAE (n=318)




41

Figure 48: Contact Preferences in the Asia-Pacific


20%

40%

35%

64%

69%

4%

19%

52%

54%

68%

54%

10%

27%

47%

43%

70%

60%

7%

33%

54%

49%

68%

62%

2%

14%

24%

18%

59%

55%

9%

22%

56%

57%

66%

56%

9%

Send a letter

Send an email







Australia (n=310)

China (n=302)

India (n=310)

Indonesia (n=330)

New Zealand (n=310)

Singapore (n=311)



42

CONCLUSION Consumers are overwhelmed with data breaches and fraud attacks. In order to restore consumer confidence, it is important to implement a strong security and fraud-prevention strategy, to communicate effectively, and to educate consumers. Encouraging consumers to engage in the battle against financial fraud will both instill consumers with confidence that they can be safer from fraud and help to retain more customers. Here are a few recommendations for financial institutions and merchants.

For financial institutions:

x Educate consumers. Help consumers understand how they can help protect themselves against fraud and work with the financial institution to combat it.

x Communicate more effectively. Ensure consumers understand how their cards and accounts are protected from fraud, how to sign up for fraud alerts, and how and why to respond quickly to fraud alerts.

x Offer options for suspicious activity notifications. While many consumers are very interested in a variety of notification methods, offering several options will increase the likelihood consumers will sign up for alerts.

For retailers:

x Improve security. Merchants have to assume they will be compromised sooner or later because cybercriminals' attacks are advancing so rapidly. Leverage technologies such as tokenization and point-to-point encryption to ensure that if the company is compromised, there is nothing of value to steal. Ongoing data breaches have caused consumers to doubt that retailers are doing enough to protect their data. Sales in stores or online may deteriorate if consumers lose confidence that their data will be protected.

x Communicate with consumers. Let consumers know what you are doing to protect their personal and financial information.

x Educate shoppers. Let consumers know if there are steps they can take to help better protect their data.



43

RELATED AITE GROUP RESEARCH Global Consumers: Losing Confidence in the Battle Against Fraud, June 2014.

EMV: Lessons Learned and the U.S. Outlook, June 2014.

Enterprise Fraud Management: Still Evolving After All These Years, May 2014.

POS EMVy: Making the Mobile POS Work in Europe, January 2014.

Global Fraud and Clueless Consumers, August 2013.

Global Consumers React to Rising Fraud: Beware Back of Wallet, October 2012.

http://www.aitegroup.com/report/global-consumers-losing-confidence-battle-against-fraud

http://www.aitegroup.com/report/emv-lessons-learned-and-us-outlook

http://www.aitegroup.com/report/enterprise-fraud-management-still-evolving-after-all-these-years

http://www.aitegroup.com/report/pos-emvy-making-mobile-pos-work-europe

http://www.aitegroup.com/report/global-fraud-and-clueless-customers

http://www.aitegroup.com/report/global-consumers-react-rising-fraud-beware-back-wallet



44

ABOUT AITE GROUP Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, securities & investments, and insurance, Aite Group's analysts deliver comprehensive, actionable advice to key market participants in financial services. Headquartered in Boston with a presence in Chicago, New York, San Francisco, London, and Milan, Aite Group works with its clients as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they remain at the forefront of industry trends.

AUTHOR INFORMATION Shirley W. Inscoe +1.617.398.5050 [email protected]

CONTACT For more information on research and consulting services, please contact:

Aite Group Sales +1.617.338.6050 [email protected]

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