COSTA MESA, Calif.–A new survey by J.D. Power finds many bank customers are reporting incidents of fraud are on the rise.
According to the latest J.D. Power Banking and Payments Intelligence Report, 36% of all banking customers in the United States say they have experienced some kind of financial fraud in the past 12 months. These incidents include unauthorized credit or debit card usage, a P2P scam, or sending money to someone posing as someone else, J.D. Power reported, noting that overall, customers with lower financial health scores experienced fraud more often than customers with higher scores.
“Somewhat surprisingly, 50% of customers under age 40 have experienced fraud in the past year, as these customers are more likely to engage in electronic transfers and, thus, are more likely to trust online requests for payments,” J.D. Power said in releasing its findings. “That has left many customers eager for answers from their bank, hoping for a quick resolution to the fraud question.”
The analysis found 51% of customers that are classified as financially overextended were victims of fraud.
The Most Common Fraud
J.D. Power reported its survey found the most common occurrences of fraud were someone making an unauthorized purchase with a customer’s credit (9%) or debit card (9%), making a purchase with a P2P payment app that ended up being a scam (8%), and customers that made a purchase with their debit card that ended up being a scam (7%).
When asked how the fraud was discovered, 41% of bank customers said they checked their statement for suspicious activity, while 31% said they received alerts about their account activity.
“Interestingly, the rates for both categories are higher for customers over age 40 than customers under age 40,” J.D. Power said.
Can’t Get No Satisfaction
The company said its survey also uncovered some brewing dissatisfaction with bank responses to fraud. The rate of customers that were “not at all satisfied” with the response to their experience with fraud was highest for P2P apps (10%), followed by card issuer (8%) and banks (7%), J.D. Power said.
“It’s worth noting that 30% of customers for each entity were ‘somewhat satisfied,’ and customers under 40 that experienced fraud more often were less satisfied with their bank, an indication that there is room for improve across the board in fraud resolution,” J.D. Power said.
Need for Fraud-Focused Customer Education
According to J.D. Power, while there have been some underlying hopes for economic optimism of late, bank customers are still in a “tenuous position.”
“An occurrence of fraudulent activity without a positive resolution could certainly push a stressed or overextended customer over the edge, making fraud prevention a key area of interest,” the company said in its analysis. “Banks that are not helping their customers prevent fraud by optimizing security settings; encouraging their customers to use tools that allow them to intervene over time, such as alert settings and credit score monitoring; and helping with resolution when fraud does occur, are at risk of alienating a large swath of their clientele.
“But financial institutions that do execute this three-pronged fraud strategy can build an increased trust in their customer bases,” J.D. Power continued. “At a time where customers are considering rate-chasing from bank to bank, financial institutions could use all the loyalty and goodwill that they can get.”
Overall Financial Health Holds Steady
Meanwhile, for a fourth consecutive month, J.D. Power reported there has been no noteworthy change in overall financial health. More than one-third (34%) of respondents are financially healthy, while 41% are vulnerable, J.D. Power said.
The overall level of inflation recognition rose slightly to 66%, a mark it has hit three of the past four months, the company said, adding the percentage of customers who said the price of goods is increasing faster than their income also rose slightly for most customer segment groups but was largely in line with the previous months.
About the Report
The Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in April 2023.
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