By Roy Urrico
Finopotamus aims to highlight white papers, surveys, blogs and reports that provide a glimpse as to what is taking place and/or impacting credit unions and other organizations in the financial services industry.
The impact of fraud protection and resolution and PayPal cons highlight a cybersecurity roundup.
J.D. Power Finds Fraud Protection and Resolution as Critical Components of Customer Banking Experience
More than one-fourth (29%) of banking customers and 22% of credit card customers have experienced some instance of fraudulent activity on their accounts in the past 12 months, according J.D. Power’s inaugural U.S. Financial Protection Satisfaction Study. The report also discovered that as financial fraud continues to escalate, how financial institutions help customers protect themselves and how they respond to incidents become key components to overall customer satisfaction, brand loyalty and advocacy with those institutions.
The study evaluated the experiences of customers of the largest retail banking institutions and credit card issuers, including American Express, Bank of America, Barclays, Capital One, Chase, Citi, Citizens Bank, Navy Federal Credit Union, PNC, Synchrony and TD Bank. The study, based on 22,982 responses, took place March through September 2024.
“Financial fraud is a big problem for banks and credit card issuers, but it also presents an opportunity from a customer experience perspective when it is handled well,” said Jennifer White, senior director for banking and payments intelligence at J.D. Power. “In fact, customer likelihood to reuse their bank or credit card company and then recommend that entity to friends is actually higher after an institution helps prevent or resolves a fraud incident than when there is no fraud incident at all. However, many institutions still have a lot of work to do when it comes to educating customers on how to protect themselves.”
Some key study findings:
Bank and credit card fraud affects many, especially younger customers. Among banking customers under age 40, 42% have experienced some form of checking, savings or debit fraud in the past 12 months.
Fraud prevention and resolution efforts rewarded by customers. Forty-six percent of banking customers and 49% of credit card customers have a more positive impression of their financial institution or credit card issuer after a fraud experience. Ninety-two percent of banking customers say they are likely to reuse their financial institutions after having a fraud issue resolved.
Customers want to help fight fraud, but many do not know how. More than one-fourth (26%) of banking customers and 31% of credit card customers have not taken any recent measures to secure their account. When it comes to true fraud prevention tactics, such as adding two-factor authentication, setting up account alerts or using facial identity or fingerprint authentication to log into accounts, no more than 20% take these measures.
Banking institutions and credit card issuers must offer persuasive protection methods. Among banking customers, 46% have been prompted by their financial institution to act on fraud prevention measures in the past 90 days. That number falls to just 40% among credit card customers.
Expert Warns of PayPal Scams Ahead of Black Friday
Online payment platform PayPal has become a prime target for scammers in recent years. With Black Friday (November 29th) set to bring an upsurge of online discounts, cybercriminals are ready to exploit the enthusiasm, and inattentiveness, of shoppers, according to cybersecurity experts at Hypernode, an ecommerce hosting platform.
“Black Friday has become a prime day, not just for bargain hunters, but for scammers, too. Cybercriminals are increasingly taking advantage of the reduced vigilance that comes with the excitement of a great deal,” said Milan Bosman, commercial director at Hypernode. He added, “With discounts now reaching record levels, distinguishing between genuine offers and scams has become harder than ever. By following these tips, shoppers can enjoy Black Friday without falling victim to fraud.”
The cybersecurity specialists spotlight some of the most common PayPal scams to watch out for this Black Friday, along with practical tips to stay protected.
Common PayPal Scams to Avoid:
The “Problem with Your Account” scam. Phishing emails are one of the most prevalent means to target PayPal users. These fraudulent messages, disguised as official PayPal communications, claim there is an issue with the user’s account or a need to verify payment details. Victims who click the included links are taken to fake websites, complete with PayPal logos and branding, designed to steal login credentials or financial information.
Promotional Offer. These cons entice victims with tempting offers such as cash rebates, discounts on future purchases, or online vouchers. The emails often link to convincing but fraudulent websites that are set up to steal personal information.
The “Order Confirmation” scam. Scammers send emails claiming a large purchase made from the victim’s PayPal account. For those making Black Friday purchases, this can seem like a legitimate confirmation. For others, it triggers concern about an unauthorized payment. Either way, the email directs victims to a fake website to “verify” the transaction, stealing their login details in the process.
The Friends and Family Payment scam. This rip-off directs buyers into using PayPal’s “Friends and Family” payment option under the pretense of a great Black Friday deal. The scammer pockets the payment and evaporates into the ether, leaving the buyer without a product or remedy. PayPal’s “Friends and Family” option does not offer buyer protection, making it an easy target for fraud.
Unauthorized Access. During Black Friday, scammers take advantage of weak passwords or outdated security settings to hack PayPal accounts. By using methods like credential stuffing, where hackers try login credentials stolen from previous data breaches, they can access accounts to siphon money or make fraudulent purchases.
How to Stay Safe While Shopping
Hypernode experts recommend the following precautions to protect against PayPal scams:
Verify Email Senders and Links. Always check the sender’s email address carefully to ensure it is from PayPal’s official domain (@paypal.com). Fraudsters often use subtle variations. Avoid clicking links in unsolicited emails; instead, log in to PayPal directly through the official app or website to verify claims.
Avoid Friends and Family Payments for Purchases. Only use the “Friends and Family” option for transferring money to people you know and trust. When buying goods or services, always use PayPal’s “Goods and Services” option, which offers buyer protection.
Be Cautious of Promotional Offers. Be skeptical of deals that seem too good to be true. Stick to known retailers or verified PayPal promotions. Cross-reference links in promotional emails with official retailer websites to confirm their legitimacy.
Enable Two-Factor Authentication (2FA). Add an extra layer of security to PayPal accounts by enabling 2FA. This requires a one-time code (sent to a phone or email) alongside a password, making it far harder for scammers to access an account.
Watch Out for Fake Confirmations. After receiving unexpected order confirmation emails, do not click any links. Log in directly to the PayPal account to check for suspicious transactions or contact PayPal’s support team for clarification.
Monitor PayPal Accounts. During busy shopping periods like Black Friday, turn on account notifications via the PayPal app or website to quickly spot and act on any unusual activity.
Stick to Trusted Websites. Shop with reputable retailers and always check website URLs for errors or unusual endings (e.g., .net instead of .com). Look for the padlock icon in the browser bar to confirm a site is secure.