Half of Cardholders Cut Card Use After Fraud: Study
Fraud is causing most online shoppers to use their debit and credit cards less, a new study said.
More than half (56%) of credit and debit cardholders in a survey, released Wednesday by Sparks Research and Fort Lauderdale, Fla.-based fraud prevention firm Tender Armor, said they shopped online less, reduced their card usage or closed card accounts after a fraudulent charge. The survey of 1,013 online shoppers during the first quarter of 2016 also found demand for data security is rising.
“Our study revealed that 78% of online shoppers want more protection for their payment card data when shopping online,” Tender Armor CEO Madeline Aufseeser said.
Card not present fraud has been a growing concern in the payments industry, even with the advent of EMV cards and the Oct. 1, 2015 liability shift. Though experts expect the use of fake plastic to decrease as EMV cards become more prevalent in the United States, they also noted that in other countries that transitioned to EMV years ago, much of the decline in card present fraud was countered by a corresponding increase in CNP fraud.
These latest findings suggested card issuers may soon face new financial challenges if members ditch their cards as a result of that CNP fraud.
“I call it the silent revenue killer,” Aufseeser told CU Times. “The lingering effects of that are much more extensive than they are for a merchant.”
Not all card issuers will see the challenges coming if they don’t track member card use before and after fraud events, she added.
The Sparks Research/Tender Armor survey found 15% of consumers who experienced CNP fraud closed their credit or debit card accounts, 12% used replacement cards less and 3% didn’t use their replacement cards at all. In addition, 14% of consumers changed where they shopped online and 12% shopped online less often.
“Once somebody sticks a card in their drawer … it's rare that they're going to go back to it,” Aufseeser said.