4
Jun

replacement debit cards a red flagMore than one in four consumers had a debit or credit card replaced in 2009 due to security issues, according to a research firm that tracks the financial services industry. The reasons vary from lost cards that had to be replaced to security concerns. According to the research firm Javelin Strategy, a large number of those had more than one card replaced or a card reissued more than once. Javelin conservatively estimates that the cost to financial institutions to reissue cards was $252 million in 2009.

Among the research findings:

  • More than one in four of all U.S. consumers have received a data breach notification.
  • New accounts fraud – which is the most difficult to detect – accounts for a large percentage of the growth in identity fraud over the past two years.
  • Consumers often either no longer use a card or use it less after it is reissued.
  • Banks are viewed less favorably by 38% of consumers after they receive a breach notification.

Changes in the law in the majority of states, as well as a new rule that went into effect June 1st, mean that banks and other financial institutions must do more to identify and detect “red flags” that signal possible identity theft. Yet the study found that these notifications are not appropriately spurring consumers to action. If you have been notified by your bank that there has been a security breach on your account, you are nearly five times more likely to experience fraud than consumers who have not been contacted about such breaches, according to Javelin.  The report costs $1,200 but you can read a press release about it here.


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