Are your customers freaked out about shopping this holiday season?
The worries that keep your clients awake at night aren't visions of sugar plums or even a scary pile of holiday credit-card bills – it's identity theft.
A whopping 85 percent of consumers surveyed for the 2018 CreditWise Holiday Shopping Survey by Capital One said they believe the holidays are a riskier time to shop. More than a third of survey respondents (37 percent) also said identity theft and financial fraud is their No. 1 concern about shopping during the holiday season, ahead of their concerns about spending too much. The survey also found that more than a quarter of respondents (26 percent) said they believed that the recent Cyber Monday was the riskiest day of the year to shop online.
"We found that identity theft and fraud is a top concern for consumers,” said Joe Whitchurch of Capital One. “In fact, according to our survey, more than half of the respondents (62 percent) who know a victim or were themselves a victim of fraud said they could use more help in keeping tabs on their personal information.”
Even shoppers who've experienced ID theft or know someone who has been a victim say they don't know exactly how to protect themselves from attacks by hackers. Three-quarters of the survey respondents said they would welcome more help in understanding how to spot and detect credit fraud.
One risk that shoppers face is that the holiday stress combined with the pressure many gift-buyers feel to economize can push them to shop in ways where they don't necessarily detect looming threats to their personal and financial data – or ignore them outright.
A poll by cybersecurity provider McAfee found that more than three-quarters of respondents (79 percent) said that holiday shopping increases their financial stress, with 53 percent admitting that pressure can cause them to be careless while shopping online, including entering personal and financial information over unsecured wi-fi networks.When it comes to bargain-hunting, 56 percent of consumers revealed that they're willing to use an unfamiliar website if it would save them money. Even more dangerous shopping habits were admitted by 31 percent of the respondents, who confessed to clicking links in suspicious emails to get better deals.
During the hectic holiday season, “People often let their guard down when it comes to their digital security, which can lead to risky consequences,” Gary Davis, chief consumer security evangelist at McAfee, said in a statement. “Cybercriminals know that people are less focused on security measures during this time and use that to their advantage.”
Online shopping increased during 2017 by 16 percent from the prior year, with consumers spending more than $453 billion on retail web purchases. With the increase in online spending, 16 percent of the Capitol One survey respondents said they are more worried now than they were last year about identity theft and financial fraud.
Shoppers are being proactive
Yet – amazingly – a mere 17 percent of shoppers reported that last year they increased their efforts while shopping online to protect their credit or prevent fraud. Millennials were twice as likely to take preventative action during the holidays than other age groups.
This trend of increasing anxiety over secure shopping and the realization that consumers – especially online shoppers – need some kind of outside help to protect themselves creates a significant opportunity for financial service and credit providers to step into the breach with protection tools that can boost customer loyalty, engagement and brand awareness. Besides ID theft, holiday shoppers also are worried about managing their budgets, their available credit and how shopping might affect their credit scores. In addition, many consumers are looking ahead to see what they can do to improve their financial situations when it comes to making their New Year's resolutions.
What's the potential here?
Financial service firms won't have time to construct, perfect and test their own financial tools during this crucial window of opportunity – but they don't need to go to that trouble. Instead, they can take advantage of the off-the-shelf, ready-to-go budgeting and credit education features available from Experian, as well as credit and identity theft protection tools.
Take the Experian Credit Educator tool. Experian found that, on average, consumers who used Credit Educator increased their VantageScore credit score by 21 points during a 12-month period. This kind of benefit is particularly attractive to millennials and other younger customers. Experian found that 76 percent of 18 to 24-year-olds are interested in financial or credit educational tools or assistance.
That's a big potential audience, especially when you consider that half of millennial consumers have no idea whether their credit score is good or bad, and more than half have had an issue with credit card spending or late payments. On top of that, a total of 16.7 million consumers were victims of identity fraud last year – up by 1 million for 2016. So far this year, nearly 1,000 data breaches have exposed the personal data of more than 47 million consumers, including 1.7 million records hacked at banking, credit and financial institutions. In such situations, according to Javelin Strategy & Research, consumers often place the blame on their financial services providers, with nearly 1 million consumers switching financial institutions because of fraud, taking a total of $4 billion in credit card spending with them.
Financial crime, identity theft, and fraud aren't going to go away, but these threats do present companies a large range of opportunities to engage, support and bond with customers by helping them secure their personal finances.