August 24, 2016
Banks Not Leveraging Text Alerts as Fraud-Fighting Tool
July 9, 2012
Many credit and debit card issuers are ignoring a powerful tool in their arsenals that would significantly reduce fraud, according to a new report from The Members Group, a Des Moines, Iowa-based company that provides processing services to credit unions and community banks. The report cites four common reasons why financial institutions are reticent to use text alerts to inform their customers of possible fraud on their payment cards: customers will dismiss alerts as spam; merchant names are too confusing for text alerts; customers already receive too many marketing messages; and the FI has not rolled out a mobile strategy. The report says each of the reasons is a myth.
Customers must opt-in to receive text alerts, so it is unlikely, the author says, that they will treat texts from their bank as spam. Merchant names in text alerts are spelled out in full, so confusion about the source of a credit card charge would not be an issue, according to the report. While consumers may be inundated with marketing messages, text alerts sent as the result of possible fraud should look nothing like marketing, the report says. As for not having rolled out a mobile strategy, the report notes that it is no longer a question of “if” but “when,” and text alerts can be a “prudent and affordable first step.”
“Next to laser accuracy, speed is the most important factor in preventing card fraud,” the report says. “Text alerts reach possible victims faster and have a greater chance of inspiring a response.”