Study ranks companies' protections against credit card fraud

A new study released Wednesday showed that consumers are generally pleased with the way credit card companies deal with reports of fraud, but that they feel more can be done to prevent the incidents in the first place.

The study by Javelin Strategy and Research graded 23 companies on a 100-point scale in the way they detect, prevent, and deal with incidents of fraud. The average score was just 59 points.

The companies scored an average of 18 out of a possible 20 points in the way they resolve fraud incidents, according to the study. But they fared only so-so in fraud protection (24 out of a possible 45 points) and poorly in fraud prevention—17 out of a possible 35.

For individual companies, Bank of America was the top scorer, garnering 87 out of a possible 100 points. Discover, U.S. Bank, USAA, and Capital One rounded out the top five.

The two largest credit card issuers, American Express (67 points) and JP Morgan Chase (66) ranked sixth and seventh, respectively, in the way they deal with fraud.

The study said account fraud totals about $37 billion annually.

Phil Blank, Javelin's managing director of security, risk, and fraud and a co-author of the study, said most incidents of fraud occur in instances when the credit card is not present—online purchases, for example. To combat that, he suggested companies send consumers text message alerts where they would have to approve or deny any transaction of that nature.

He also said banks should stop asking customers for the Social Security numbers as a routine form of identification, since they are a primary target for fraudsters.

Check out Consumer Reports' Guide to Security for more tips on fighting fraud.

Sources:
Your credit card data is probably at risk [TIME]
Study: Credit card issuers can do more on safety [Boston.com]
Seventh Annual Card Issuer's Safety Scorecard [Javelin Strategy and Research]

—Evan MacDonald