Expert claims banks are failing to educate their customers with regards to payment fraud

Shirley Inscoe, an Aite analyst, claims that banking institutions are not doing a proper job of teaching their consumers about how to prevent payment fraud. Inscoe explained that banks need to be more proactive and figure out a way to teach consumers in a method that they can understand.

Inscoe is the author of a newly released report entitled Global Fraud and Clueless Consumers in which she argues that fraud prevention is actually helpful for business in the long run because fraud is one of the major reasons that consumers end up switching financial institutions.

She added that consumers are becoming increasingly concerned about fraud listing identity fraud often as their top worry, but at the same time that they are worried they do not know enough about payment systems to know how to properly protect themselves from becoming victims of fraud.

In order to assess payment risks, Aite conducted a survey of over 5,000 consumers globally and discovered that online purchases made with debit and credit cards were the most concerning for customers. She wrote that it is interesting that consumers are more concerned about shopping online versus shopping in store even though data reveals that point of sale fraud is actually more common.

According to Inscoe, tighter card technology like the chip card technology that is used in some countries would help to reduce the risks of shopping although it would have to confirm to the Visa Standard, MasterCard, and Europay.

These cards, known as EMV cards, utilize a micro-computer chip that allows data on the chip to be stored and encrypted so that they cannot be copied or skimmed which is what frequently happens to data that is saved to cards with mag-stripes. Inscoe stated that banking institutions are not properly telling consumers about how EMV could help protect them even in countries that have EMV compliance.