Consumers Worried About Card Fraud and Identity Theft

Discussion
Nov 16, 2005
George Anderson

By George Anderson

Whether shopping online or in stores, consumers are concerned about their personal information finding its way into the hands of criminals.

A new IBM survey of 1,000 consumers found:

  • 14 percent have had their personal and/or credit card information stolen
  • 10 percent had their information stolen during a holiday period
  • 61 percent are concerned about having their information stolen
  • 66 percent say they are more concerned this year than last
  • 49 percent believe the use of biometrics would offer greater security
  • 40 percent believe more sophisticated encryption technology is the answer for more secure transactions
  • 32 percent believe iris scans could reduce theft

“Consumers buy from retailers they trust and those retailers who are making security a priority will have a competitive advantage,” said Joseph L. Gagnon, global retail leader,
IBM. “Advanced technologies, from sophisticated encryption to bio-metric technologies, are being developed by researchers to help retailers increase security and build that all-important
trust with shoppers.”

As to who is responsible for safeguarding their information, respondents to the study said:

  • Credit card companies – 27 percent
  • Retailers – 15 percent
  • Individuals themselves – 26 percent.

Moderator’s Comment: Is the perception that a retailer is “safe” a competitive advantage? How do retailers communicate to consumers that their security
is a priority?

George Anderson – Moderator

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8 Comments on "Consumers Worried About Card Fraud and Identity Theft"


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Mark Lilien
Guest
15 years 3 months ago

Everyone knows someone who’s had a security problem, if they haven’t had a problem themselves. Whether it’s unauthorized credit card charges, lost credit cards, identity theft, check fraud, unauthorized long-distance provider change, phishing – everyone is aware of these problems. Retailers, particularly internet retailers, who clearly explain what they’re doing to reduce these problems, would have a sales advantage, if the explanations have credibility. Most internet retailers display security logos, but I doubt these have much special value any more. Some internet retailers allow payments to be made via telephone, which reassures some folks. I’d be very interested to hear of a retailer, particularly an internet retailer, who’s done anything unusually reassuring.

Al McClain
Guest
Al McClain
15 years 3 months ago

Having had my credit card info. stolen twice, once in the physical world and once apparently online, I can think of a couple of things retailers and credit card companies can do to make consumers feel more secure. 1. Make sure their websites are actually secure, and prominently post assurances. 2. Show concern when credit card info. is stolen – not act as if this is routine and there is no way for them to figure out what happened.

Consumers also need to do more themselves, such as buy shredders and install proper protection on their computer. Recently, finding out that my credit card had a block on it due to fraudulent attempted transactions in Malaysia made me feel good in the sense that the credit card company caught it, but less secure in that they have no idea what happened, and aren’t trying to find out.

Ron Margulis
Guest
15 years 3 months ago

Certainly, the perception of being “unsafe” in terms of protecting a customer’s identity is a competitive disadvantage. Retailers need to make an extra effort to communicate the company’s policies on privacy in a clear and open fashion, unlike the financial firms that send out those nearly incomprehensible privacy statements each year. Taking a quarter page in the ad circular to explain what the retailer is doing to prevent ID theft and like crimes is a start. (Maybe the loss prevention vendor will support the space, so there will be no revenue loss.) Retailers also have to train and provide incentives to front-line employees to stress both the messaging and execute the policy.

Warren Thayer
Guest
15 years 3 months ago
I thoroughly agree that it is a competitive advantage, especially online. When you’re online, if you are considering a purchase from an unfamiliar company, you don’t have the advantage of knowing where the storefront is, so you can complain or try to bring about some legal action on your behalf. If it’s a website, and they take your money and run, well, you haven’t got much. I think people tend to look for companies they know online, or, at the least, for that little padlock to show up onscreen that denotes (I think) more safety in encryption or whatever. An assurance, on a company website, that they are really safe with credit card transactions, would do absolutely nothing either way for my confidence level. I mean, people can say anything they want to. And, I don’t know how you’d really advertise to shoppers that your brick and mortar location is safe with credit card transactions. If you post a sign or do an ad, you’re practically inviting hackers, “Come get me!” I think it has… Read more »
Matt Werhner
Guest
Matt Werhner
15 years 3 months ago

Identity theft and fraud can have detrimental consequences to the victim and this survey shows consumers have a major concern regarding these crimes, especially with 61 percent saying they are more concerned this year than last. Responsibility for safeguarding personal information lies with all parties: the individual, the retailer, and the credit card company.

I believe most of this concern comes with online transactions. What would the growth in ecommerce be at this point if the majority of consumers felt at least a little more comfortable conducting online transactions? What would the growth be if consumers felt almost entirely comfortable? In order to grow this area of business, companies must gain the consumers trust by initiating advanced encryption and increased security and advertising these measures. A successful and comfortable transaction equals customer loyalty.

Bernice Hurst
Guest
15 years 3 months ago

Telephone transactions concern me far more than online transactions but in both cases it is relatively easy for a dishonest person to get hold of details. What makes me angry is the attitude of the credit cards companies and banks who make so little effort to improve security or show any concern or sympathy for people whose details have been misused. Having said that, I have to give credit to a couple of companies that actually refused to let me use my own card simply because I was in a location other than where I usually use it and they didn’t want to risk letting a fraudster spend my money. It may have been inconvenient and infuriating but there was an element of comfort as well.

Jeff Weitzman
Guest
Jeff Weitzman
15 years 3 months ago

Hey, how about we start with having clerks actually compare the signature on the back of the card to what you sign on the charge slip! How often does that actually happen at a retailer?

The little padlock icon at an online store is about the equivalent of making sure nobody is looking over your shoulder while you enter your PIN at an ATM. It really doesn’t say anything about the safety of your information where it is really going to be stolen from, which is from a database somewhere. Those databases are being kept by offline as well as online retailers, and there is really no way for a consumer to tell how secure it is.

The perception of security, which is how the question was posed, IS an asset, and a lot easier to create. As I said above, simple things like checking a signature or photo ID, or requiring the security code be entered in online transactions, can eliminate a LOT of fraud, and should make consumers feel safer.

Doug Fleener
Guest
15 years 3 months ago
I find it almost humorous that customers are so worried about online theft but hand their card over to or read it over the phone every day to strangers. I ran a store once where we did have an employee writing down the customer’s credit card number and then using it to buy things over the phone. (This was pre-internet days.) What a mess. It created real heartache for the customer, it was a pain to me, the manager, to have to deal with, and the young man ended up getting caught and being arrested and forever having it on his record. I’m not sure that retailers can do anything more than what they’re doing today to communicate to the customer that security is a priority. What they can do more of is to communicate to their employees the consequences of their actions when they break the law. I’ve seen too many retailers not take legal action against an employee for the fear of publicity. I would actually trust a company more if I had… Read more »
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