Purpose – The purpose of this paper is to establish a conceptual as well as an empirical link between retail banks’ activities to protect their customers from third‐party fraud, the quality of customer relationships, and customer loyalty.Design/methodology/approach – A conceptual framework is developed linking customer familiarity with and knowledge about fraud prevention measures, relationship quality, and customer loyalty. To empirically test the conceptual framework, data were collected in collaboration with a large German retail bank.Findings – A positive association was found between customer familiarity with and knowledge about fraud prevention measures and the quality of customer relationships as measured by satisfaction, trust, and commitment. The quality of customer relationships, in turn, is positively associated with customer loyalty as measured by intentions to continue their relationship with and cross‐buy other products from their bank.Research limitations/implications – The paper focuses on...

The impact of fraud prevention on bank-customer relationships: an empirical investigation in retail banking

Using a unique administrative level dataset from a large and diverse U.S. financial institution, we test the impact of rewards on credit card spending and debt. Specifically, we study the impact of cash-back rewards on individuals before and during their enrollment in the program. We find that with an average cash-back reward of $25, spending and debt increases by $79 and $191 a month, respectively during the first quarter. Furthermore, we find that cardholders who do not use their card prior to the cash-back program increase their spending and debt more than cardholders with debt prior to the cash-back program. In addition, we find that 11 percent of cardholders that did not use their cards in the previous 3 months prior to the cash-back program spent at least $50 in the first month of the program. Finally, we find heterogeneous responses by demographic and credit constraint characteristics.

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Why do banks reward their customers to use their credit cards

E-Banking frauds is an issue experienced globally and continues to prove costly to both banks and customers. Frauds in e-banking services occur due to various compromises in security, ranging from weak authentication systems to insufficient internal controls. Although some security frameworks to address this issue of fraud have been proposed, the problem of e-banking fraud remains due to the inability of these framework to deal with organisational issues. With limited research in this area, the study sets out to identify the organisational Critical Success Factors (CSF) for E-Banking Frauds Prevention in Nigeria by applying CSF theory. A framework is proposed to help improve security from an organisational perspective. 

The study adopted a mixture of philosophical paradigms which led to the triangulation of research methods; Literature Review, Survey and Case Studies. The Literature Review involved the synthesis of existing literature and identified potential CSF for frauds prevention in e-banking. A total of 28 factors were identified and a conceptual framework was proposed. A 5-point Likert scale survey questionnaire was sent to retail bank staff in Nigeria to rate the criticality of the factors. A total of 110 useable responses were received at a response rate of 23.9%. Similar interrelated factors were grouped using a Principal Component Analysis. Finally, case studies with 4 banks in Nigeria were carried out to deepen our understanding. 

The study identified a total of 10 CSF which spanned across strategic, operational and technological factor categories. These included ‘Management Commitment’, ‘Engagement of Subject Matter Experts’ and ‘Multi-Layer Authentication’ amongst others. In addition, new CSF such as ‘Risk-Based Transactional Controls’, ‘People Awareness & Training’ and ‘Bank Agility via Data Driven Decision Making’ were identified. Finally, these CSF were grouped into an e-banking frauds prevention framework. This study is a pioneer study that extends theory to propose a CSF-based frauds prevention framework for banks in Nigeria.

An Investigation into the Critical Success Factors for E-Banking Frauds Prevention in Nigeria

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An Information Security Control Assessment Methodology for Organizations.

This report answers some frequently asked questions about the Target and selected other data breaches, including what is known to have happened in the breach, and what costs may result. It also examines some of the broader issues common to data breaches, including how the payment system works, how cybersecurity costs are shared and allocated within the payment system, who bears the losses in such breaches more generally, what emerging cybersecurity technologies may help prevent them, and what role the government could play in encouraging their adoption. The report addresses policy issues that were discussed in the 113th Congress to deal with these issues.

https://digital.library.unt.edu/ark:/67531/metadc503332/m1/1/high_res_d/R43496_2015Feb04.pdf

The Target and Other Financial Data Breaches: Frequently Asked Questions

To examine the adequacy of existing efforts to prevent, manage and mitigate data breaches and other fraud in card-based payment systems, the authors conducted 17 interviews of various payment industry participants in 2009. This article documents the insights gained from the interviews, which consider the need for greater cooperation, sharing of relevant information and innovation to stay ahead of the criminals that perpetrate payment card fraud with increasingly sophisticated methods.

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The Efficiency and Integrity of Payment Card Systems: Industry Views on the Risks Posed by Data Breaches

The authors highlight key issues from the presentations, keynote addresses, and open floor discussions at the Federal Reserve Bank of Chicago's eighth annual Payments Conference.

Payments Fraud: Perception versus Reality - A Conference Summary

An overview of payments fraud Payments fraud can be broadly defined as any activity that uses information from any type of payments transaction for unlawful gain. Such fraud can be perpetrated on any type of payments device, including credit and debit cards, cash, checks, online or mobile payments, and automated clearinghouse (ACH) transactions. Payments fraud can be committed knowingly by a consumer (first-party fraud), or consumers can be victimized by fraudsters operating within financial institutions or as part of criminal enterprises (third-party fraud). Payments fraud has received extensive attention in the popular press and in public policy venues recently, and the payments industry is fighting the perception that fraud is now occurring at unmanageable levels. While there has been increasing emphasis on all types of payments fraud, fraud perpetrated by criminals has received special attention of late. (1) Fraud is a very real threat to the payments system's efficiency. According to one recent report, 71 percent of surveyed organizations experienced payments fraud in 2007, and over one-third of those firms reported financial losses stemming from the fraudulent activity. (2) As another example of the size of the payments fraud problem, in a 2007 data breach involving TJX Companies Inc. (the holding company of retailers T. J. Maxx, Marshalls, Winners, HomeGoods, TK Maxx, A. J. Wright, and HomeSense), 45,700,000 credit card and debit card account numbers were stolen, along with 455,000 merchandise return records containing customer names and driver's license numbers. Latest reports allege that an additional 48 million people have been affected for a total of over 30 percent of the entire U.S. population. The situation has cost TJX Companies Inc. more than $130 million in settlement claims. The breach was a worldwide effort perpetrated by criminals from the United States, Eastern Europe, and China. The U.S. Department of Justice has arrested 11 people in this case, which is the largest hacking and identity theft case ever prosecuted by the department. (3) As more payments become electronic, the size and scope of payments fraud has grown, in part because the relevant parties in a payments transaction do not know one another. Information about those parties is vital to prevent fraud and enable legitimate transactions. However, as innovations in payments technology have made authentication of information more reliable, other technological innovations have made that information more widely available and subject to abuse. Fraud such as counterfeiting or check forgery has always had a global reach. However, payments fraud used to be much more reliant on physical connections between parties, such as the theft of an individual checkbook or credit card. Today, modern databases, online information sharing, and increased access points have opened up opportunities for sophisticated criminal gangs to perpetrate fraud from remote comers of the globe. Further, the growing presence of nonbanks and third-party service providers means that regulated financial institutions must consider the security of those providers. At the same time, new laws and standards are being developed for payment activities and instruments. While the continual refining of systems and rules arguably makes payments easier and more efficient, the fast pace of change can compound fraud potential as fraudsters hunt to exploit the weakest link in the emerging systems. In this complex environment, market participants and governments must determine whether new payment types carry excessive fraud risk; who is liable when payments fraud occurs; how losses are allocated; what consumer protections should be in place; how notification of fraud should be handled; and how standards should be defined to minimize the incidence of fraud. It is a tall order, but payments providers must also identify consumers whom they have never met and authorize electronic transactions from which they might be far removed. …

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Payments Fraud: Perception versus Reality-A Conference Summary

Immediate funds transfer (IFT) is a convenient, certain, secure, and low-cost means of electronically transferring money between bank accounts with no or minimal delay in receivers’ receipt and use of funds. Yet IFT is not widely available in the U.S. This article summarizes discussions on the potential for IFT in the U.S. held at the Symposium on Immediate Funds Transfer for General-Purpose Payments, sponsored by the Federal Reserve Bank of Chicago, on September 7, 2011.

Evaluating the potential of immediate funds transfer for general-purpose payments in the United States

The Federal Reserve Bank of Chicago will host its eighth payments conference on June 5–6, 2008. The conference will highlight threats to the security of the payments system and explore solutions to those challenges. This article previews issues that will be covered at the conference.

Katy Jacob

Papers

The Efficiency and Integrity of Payment Card Systems: Industry Views on the Risks Posed by Data Breaches

Payments Fraud: Perception versus Reality - A Conference Summary

Payments Fraud: Perception versus Reality-A Conference Summary

Evaluating the potential of immediate funds transfer for general-purpose payments in the United States

Assessing the Landscape of Payments Fraud