NEW YORK, August 6, 2008 — For credit card users, a trust-damaging event like fraud can be the “moment of truth” in their relationship with their issuer and a negative experience can lead them to switch providers, according to a new survey of consumers in the United States conducted by Deloitte. Among those surveyed who have been victims of fraud, almost one-third reported reducing their business or terminating their relationship entirely.

“With payments estimated to drive as much as 30 to 50 percent of an average bank’s revenue, financial institutions can ill afford to make mistakes that may result in losing customers — especially in the current environment,” said Brian Shniderman, one of the leaders for Deloitte’s U.S. Payments service line and a director of Deloitte Consulting LLP. “This moment of truth, as we call it, can give a credit card company or issuer a customer for life, or lose them entirely. Consumer trust is not something to be taken lightly.”

According to the report — released by the Deloitte Center for Banking Solutions and titled “Building Consumer Trust in Retail Payments: Laying a Solid Foundation” — fraud is seen as a growing problem by 84 percent of card users, and 89 percent feel that an incident of fraud could have a major negative impact on their lives.

The survey found that 40 percent of fraud victims had been pleasantly surprised by the service and assistance they received, saying that their level of trust in the provider involved had actually increased as a result of the fraud incident. And, surprisingly, the majority of those surveyed who had experienced fraud actually rated their providers higher than those who had not experienced a fraud related event.

However, when badly handled, a fraud event directly impacts a financial institution’s bottom line — in lost customers and fewer customer transactions. Dissatisfied customers will also tell friends, relatives and co-workers of their unhappy experience. The result could be lower revenues, pressure on margins and higher customer acquisition costs to replace the lost business.

In fact, roughly two-thirds of the fraud victims surveyed — and half of other consumers — said they knew of friends, relatives and colleagues who had recently experienced fraud.

“A poorly resolved fraud event can create ripples that travel far beyond the original consumer; customers need to feel confident that their transactions and data are being handled safely and securely,” said Shniderman. “While payments providers depend upon trust to help secure and build consumer relationships, it is often an overlooked, unmeasured and — to a great extent — unmanaged asset, even though it is ranked as the No. 1 customer concern. Sound management needs to be based on an understanding of what drives trust, the costs and benefits of investing in trust and the actions institutions can take to build trust. They need to have a plan of action.”

About Deloitte
As used in this document, “Deloitte” means Deloitte LLP and Deloitte Services LP, which is a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.