PLEASANTON, CA – Javelin Strategy & Research, a leader in financial services research and analysis, today released the results of the Identity Fraud Safety Scorecard for Credit Card Issuers. The Scorecard ranks 39 leading credit card issuers on their online identity fraud prevention, detection and resolution capabilities. The study shows that identity fraud safety features and campaigns represent a significant opportunity for credit card issuers to differentiate their offerings, deepen cardholder relationships and contain fraud losses. According to Javelin’s 2005 Identity Fraud Survey Report, the annual dollar volume of identity fraud is $52.6 billion with 9.3 million victims.
Javelin reviewed Web sites and conducted mystery shopper research to score issuers on 38 categories of capabilities ranging from account alerts to the prohibition of certain transactions. The results show that issuers differ significantly in areas of safety that notably influence cardholder adoption, usage and loyalty. While all issuers are working hard to protect their cardholders, the following providers topped the list:
- Discover Card
- First National Bank of Omaha
- Citibank
- Bank of America
- American Express
Issuers can differentiate their card offerings by promoting specific new capabilities to prevent and detect identity fraud, such as expanded alerts, limits on certain types of transactions or purchases, and improved notices regarding changes to personal information (which could indicate account take-over). Seventy-two percent of consumers surveyed highly value email alerts relating to unusual account transactions, yet most issuers have not implemented user-defined alerts and personal information change alerts.
“The study shows that consumers want more from their financial institution in two primary areas: 1) a proactive approach that allows crimes to be prevented rather than resolved after-the-fact, and 2) advanced detection capabilities to give them a more active role in monitoring potential unauthorized activity,” noted Edward Neumann, Managing Director of Consulting for Javelin Strategy & Research.
The Javelin study also outlines the strategic opportunity to partner with accountholders (who detect more than half of all identity fraud cases) to contain the $52.6 billion annual identity fraud expense, while increasing customer loyalty. Issuers can implement the report’s specific recommendations to achieve the following benefits:
- Improved adoption, selection and loyalty by fulfilling cardholders’ desires to actively help prevent and detect fraud
- Decreased fraud costs, ranging from improved customer service resolution efforts to fewer charge-offs, by partnering with cardholders to develop a more focused and refined fraud target.
- Reduced fraud numbers, by elimination of high-risk data exposed through paper or electronic channels
- Added revenue, decreased risk, and lower costs for both existing and new account fraud by creating third-party partnerships for optional services
“Email alerts deliver two huge cardholder benefits — convenience and security,” said Bruce Cundiff, Analyst at Javelin Strategy & Research. “Offering safety-oriented notifications should be a priority for every U.S. financial institution.”
Individuals can receive a personal assessment of their current safety and learn action steps to protect themselves by taking Javelin’s identity fraud safety quiz at www.idsafety.net. Co-hosted by the Council of Better Business Bureaus since January, 2005, this quiz is based on the structured results of the 2005 Identity Fraud survey report.
