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Equifax Breach Hasn’t Eroded Trust in Banks

(New York, NY): Following its breach more than six months ago, Equifax is the least trusted credit bureau, according to new data from Auriemma Group. While this may be a natural outcome of such a high-profile event, the research shows there has been a ripple effect that has weakened trust in Experian and TransUnion, sparking consumer skepticism about how credit bureaus are protecting data. But while consumers’ trust in credit bureaus has been damaged by the breach, they continue to express confidence in their banks’ and issuers’ ability to protect their financial information—82% of cardholders believe their financial accounts are secure and about 80% reporting confidence in their bank’s and/or credit card issuer’s ability to protect their financial information.

Although the Equifax breach wasn’t the largest data breach of all time, the bureau received increased scrutiny from government officials and consumers alike for not having the same regulatory oversight on data protections as banks, issuers and other financial institutions. In January, senators introduced a bill to create mandatory penalties for data breaches at credit reporting agencies. While the political reality of such measures is unclear, it could be championed by the public: According to Auriemma, 78% of consumers believe credit bureaus should be subject to greater regulation. Recent news places the Equifax investigation on hold, however, as sources recently said interim director Mick Mulvaney has yet to request subpoenas against the reporting agency, or sought sworn testimony from its executives.

Consumers’ trust in Equifax has been eroded—31% believe they were impacted by the Equifax breach, which also likely affected trust for all credit bureaus, according to Auriemma. One-quarter (25%) say they have don’t trust any of the reporting agencies with their financial information. Only 10% of cardholders say they trust each of the credit agencies a lot. Equifax falls at least 10 points behind TransUnion and Experian in credit cardholders that have at least a little trust in each respective credit agencies.

“While levels of trust with TransUnion and Experian are near equal, Equifax is likely suffering from the handling of its recent data breach,” says Jaclyn Holmes, Director of Auriemma’s Payment Insights practice. “The level of distrust is even more stark among those who believe they were impacted by the breach – just over half of those individuals no longer trust Equifax with their financial information.”

More than half (53%) of respondents believe the Equifax breach was handled poorly by the company, likely due to the delayed response and remediation efforts. But Equifax’s eventual efforts to communicate with and provide ID theft protections to impacted consumers did not go unnoticed by the remaining 47% of respondents, who say the bureau responded at least somewhat well.

While Equifax offered web-based tools to help consumers post-breach, a very low proportion (38%) of respondents who believe they were impacted used these tools. Impacted consumers opted to check their credit report themselves more frequently than those not impacted (46% versus 21%), began monitoring their existing credit and bank accounts more closely (46% versus 18%), enabled two-factor authentication where possible (23% versus 6%), and placed fraud alerts and credit freezes on file (21% versus 3%).

“Even among those who say they’re certain they were impacted, only half say they visited www.equifaxsecurity2017.com to see if they were exposed, which speaks to a general weariness for Equifax’s online portal and their response to the breach,” says Holmes.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group among 800 US adult credit cardholders in November 2017. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 20 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (212) 323-7000.

 

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Auriemma Consulting Group and NBPCA Collaborate on Prepaid Consumer Research for Power of Prepaid Conference

(New York, NY):  Auriemma Group will present consumer research conducted in partnership with the Network Branded Prepaid Card Association (NBPCA) at the Power of Prepaid conference, scheduled for June 21 – 23 in Washington, D.C.

The keynote session, scheduled for 8:00 – 8:30 a.m. on Friday, June 23, focuses on consumers’ shifting attitudes and usage patterns of prepaid products, and will provide attendees with a first look at ACG consumer research developed in partnership with the NBPCA. Jaclyn Holmes, Director in ACG’s Payments Insights practice, will discuss the data in a fireside chat with Loraine DeBonis, Editor-in-Chief of Paybefore.

Designed to better understand the prepaid landscape in the current regulatory environment, this consumer-focused study explores a wide range of timely topics, from fee structure to the perceived value of prepaid in comparison to a checking account.

“While prepaid cards can be used as an alternative for traditional banking products, the data suggests the product’s utility has a far reach,” Holmes said. “Prepaid cardholders are an especially unique group of consumers, and the findings help to understand their motivations for usage.”

Attendees will get insight into the best ways to drive prepaid usage, as well as how to best position prepaid’s value to customers. Findings within the data include:

  • The surprising ways in which consumers are using prepaid cards
  • Untapped opportunities to better communicate and position prepaid’s strengths to consumers
  • How to combat barriers to initial usage

“Understanding how consumers view and understand prepaid products allows issuers to determine how to best navigate through the new regulatory landscape,” Holmes said. “This research will provide attendees insights from the consumer’s perspective that they draw upon as they make critical product and marketing decisions moving forward.”

This collaboration marks the first time ACG has partnered with an industry association to conduct custom consumer research and signals ACG’s ongoing commitment to work with industry associations to illuminate solutions in an evolving environment.

Prepaid providers attending the Power of Prepaid conference can book a one-on-one meeting with ACG to discuss how the consultancy’s research and advisory work can help acquire more customers, and operate more effectively.

About Auriemma Group

Auriemma is one of the most recognized and respected boutique providers of advisory consulting services to the Payments, Lending, and Retail industries.  Our rich history of engaging with Retailers started 30 years ago, with the introduction of the first co-brand credit card program.  The work we do with Retailers in the context of Payments has helped them tangibly improve customer acquisition, retention, service, and loyalty.  Our range of services includes Industry Roundtables (best practices and benchmarking), Partnerships (co-brand and private label), Corporate Finance (transaction advisory), and Payment Insights (consumer research).

About the NBPCA

The Network Branded Prepaid Card Association (NBPCA) is a non-profit, inter-industry trade association that supports the growth and success of network branded prepaid cards and represents the common interests of the many players in this new and rapidly growing payments category. For additional information, visit www.NBPCA.org, or follow on Twitter @NBPCA.

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Auriemma to speak at Two Co-Brand Conferences in May 2017

 

Auriemma Group will have co-brand-focused speaking roles at two separate conferences in May 2017.

Marianne Berry, Managing Director of ACG’s Payments Insights practice, will be presenting at CARD Forum’s Co-Branding Opportunities track on Tuesday, May 9th from 3:15-3:55 p.m. Using proprietary consumer research, Berry will share information on the consumer lifecycle of retail-oriented cards, specifically co-brand and private label, examining everything from acquisition to rewards redemption.

Attendees will learn about the demographics of retail-oriented card users, how retail cards are acquired, how to increase loyal, top-of-wallet usage, how to motivate activity on infrequently or unused retail cards and which benefits consumers prize most highly.

“In the retail environment, leveraging a retail-oriented card for greater consumer spend and brand loyalty is paramount,” Berry said. “This presentation will share how the consumer thinks about benefits and redemption options, as well as the offers that can overcome the ‘one-and-done’ phenomenon that stands in the way of loyal usage.”

Gary Rezak, Director in the Auriemma Global Partnerships practice, will speak on a panel at the third annual Co-Brand Conference produced by Airline Information. The session, scheduled for Tuesday, May 23rd, will focus on interchange, mobile wallets, and other key industry topics. The panel will be moderated by Madeleine Anderson, a former British Airways senior loyalty marketing executive.

“This session’s focus will arm portfolio managers with best practices on how to interpret the key industry trends that have implications for their programs,” Rezak said.

Auriemma’s presence at these co-brand-focused events is a testament to its long history in transaction advisory and consumer research centered on the co-brand space. In addition to traditional advisory services, Auriemma’s co-brand offerings provide a 360-view of the space, including ongoing work in improving portfolio profitability and increasing consumer usage.

Brands and issuers attending these conferences can book a one-on-one meeting with Auriemma speakers to discuss how the consultancy’s research and advisory work can aid in acquiring more customers, generating greater spend and creating deeper consumer loyalty.

About Auriemma Group

Auriemma is one of the most recognized and respected boutique providers of advisory consulting services to the Payments, Lending, and Retail industries.  Our rich history of engaging with Brands started 30 years ago, with the introduction of the first co-brand credit card program.  The work we do with Retailers in the context of Payments has helped them tangibly improve customer acquisition, retention, service, and loyalty.  Our range of services includes Industry Roundtables (best practices and benchmarking), Partnerships (co-brand and private label), Corporate Finance (transaction advisory), and Payment Insights (consumer research).

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Auriemma Advises Toyota Financial Savings Bank on Its Transition from Self-Issuance to Co-Brand

Auriemma Group advised Toyota Financial Savings Bank (TFSB) on strategy and execution of TFSB’s transition from a self-issuer of its Toyota and Lexus card programs to a co-brand credit card partnership with Alliance Data Systems (ADS).  Auriemma managed the TFSB issuer and network partner selection processes, and supported the negotiation of its issuer and portfolio sale agreements with ADS, along with its selected payment network contract.

Read more here.

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Consumer Understanding of Credit Bureau Data May Be Flawed

NEW YORK, NY:  Over the years, American consumers have gained greater transparency on credit reporting. For example, in 2003, The Fair Credit Reporting Act (FCRA) was amended to require that each of the nationwide credit reporting companies provide consumers with one free copy of their credit report, upon request, once every 12 months. Previously, access was available for a fee unless the consumer had already been denied credit based upon credit bureau information.

According to recent consumer research published in Cardbeat®, a syndicated research report published by Auriemma Group, most U.S. consumers have a general awareness of credit bureau information (including their credit reports). Many consumers also understand the impact information has on their ability to obtain credit at a reasonable price. Cardbeat research shows that half (50%) of consumers are generally familiar with credit bureaus, with a higher percentage familiar when consumers have children in the household (66%), or are affluent, defined as consumers with $100,000 or more in assets (61%). Since the FCRA was amended to provide free consumer access to their credit information, the incidence of consumers who have reviewed their credit reports has grown from slightly less than half (49%) to more than three in five (62%).

Consumers consider their credit bureau information and credit score to be of nearly equal importance in terms of their ability to get the credit they need at a reasonable price (79% and 82%, respectively). However, more than one-third (34%) of consumers feel the cost associated with accessing their credit bureau information is not reasonable, when, in fact, it should be accessible for free.

Marianne Berry, Managing Director of the Payment Insights practice at Auriemma says, “The discrepancy between actual cost and perceived cost may be explained by possible consumer confusion.” For example, services that provide credit monitoring often charge fees. The Federal Trade Commission acknowledges that imposter websites claiming to offer “free credit reports,” “free credit scores,” or “free credit monitoring” have created consumer confusion. (Although the CARD Act did mandate new disclosures in the advertising of such services.)

Another area of confusion is the fact that credit reporting is not the same as credit scores. Credit scores are not routinely provided for free. Further, there are different credit scores available (widely-used credit scores are those developed by FICO, and another called VantageScore created in collaboration with the three major credit bureaus).

Financial institutions may have a role in helping to educate consumers. For example, banks’ own websites can potentially direct consumers to the official ‘annualcreditreport.com’ website for a free copy of their credit reports. Also, some credit cards are now offering consumers with complimentary access to their FICO credit scores. Ms. Berry adds, “While the short-term financial benefit of providing such consumer education may be difficult to quantify, gaining consumer trust may pay longer-term dividends by establishing them as a provider of choice.”

About Auriemma Consulting Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. For more information, call 212-323-7000.

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