How Credit Card Companies Handle Fraud and Security Breaches Affects Satisfaction; When Done Right, a Bad Event Can Turn Into a Positive Customer Experience
WESTLAKE VILLAGE, Calif.: 28 August 2014 — American Express and Discover—two credit card issuers with very different business models—tie for the highest ranking in credit card customer satisfaction, demonstrating that there is more than one path to satisfaction, according to the J.D. Power 2014 U.S. Credit Card Satisfaction StudySM released today.
The study, now in its eighth year, measures customer satisfaction with credit card issuers by examining six factors: interaction; credit card terms; billing and payment; rewards; benefits and services; and problem resolution. Overall satisfaction is at a record-high of 778 on a 1,000-point scale in 2014, surpassing the previous high of 767 in the 2013 study.
American Express, which ranked highest in each of the eight years since the study’s inception in 2007, and Discover each achieve a score of 819. However, the two companies attain the same high level of customer satisfaction using very different business models.
American Express offers 21 cards aimed at different customer segments—some with annual fees and some without—and an array of reward options ranging from cash-back to travel rewards. Its customers tend to be more affluent, spend more and are less likely to carry a balance than customers of other card issuers. Discover’s strategy focuses on a single card with cash-back rewards and no annual fees. Discover serves a broad customer base and offers tools to help its customers manage their spending and debt, and provides its cardholders their credit score free of charge.
“This is really a tale of two very different credit card companies that both excel at customer interactions,” said Jim Miller, senior director of banking services at J.D. Power. “American Express and Discover provide great personal service when customers call in and also make it easy for customers to manage their accounts online as well as by using mobile apps.
“The market is ultracompetitive and credit card companies are using reward programs to make their card more attractive. However, layering on rewards is not the key to satisfied customers, rather it’s understanding your customers, knowing what motivates them and aligning rewards and benefits to their needs.”
Fraudulent Activity, Security Breaches and Satisfaction
While only 11 percent of customers report a problem or complaint with their credit card, the most common issue is unauthorized or fraudulent activity, which accounts for 21 percent of all problems. Interestingly, when properly handled, credit card companies can turn a bad event into a positive customer experience.
Customers are much more understanding about possible fraud and perceive their bank is looking out for them, compared with a security breach. Satisfaction among customers contacted about possible fraud is 797, compared with 767 among those contacted about a security breach.
Furthermore, the study finds that when a credit card company notifies a customer of a security breach but does not issue a new card, satisfaction drops to 734. When a new card is issued, satisfaction improves to 788, and increases to 801 when customers get the new card quickly—within seven days. When a credit card company notifies a customer, replaces their card within seven days and ensures they receive email alerts, customer satisfaction jumps to 835.
Cardholders can also protect themselves from fraud and security breaches. In addition to checking their billing statements, they can set up alerts with their card company to monitor their activity. Beyond that, cardholders also should review their credit reports—each of the three main credit reporting agencies offer one report free each year—and track their credit scores to detect fraud or identity theft.
- Chase ranks third in customer satisfaction with a score of 789.
- Even with record-high customer satisfaction, 10 percent of customers have switched their primary card in 2014, up from 8 percent in 2013. Among those who switched cards, 42% did so for a better rewards program.
- Credit card issuers are working to improve their rewards programs to retain customers, as 19 percent of customers indicate the value of their rewards program has improved in 2014, up from 17 percent in 2013.
- Improved understanding of their current rewards programs may prevent customers from shopping for a new primary card. The percentage of customers who say they “completely” understand how to earn rewards has increased to 63 percent in 2014 from 59 percent in 2013. However, in 2014, 21 percent of customers don’t know if they can earn extra rewards for specific purchases; 43 percent don’t know if their rewards have an annual maximum limit; and 30 percent don’t know if their rewards have an expiration date.
- One way a credit card issuer can look out for its customers and increase communication is through emailing service alerts. Satisfaction among customers who receive service alerts is 76 points higher than among those who either don’t know they are available or think they are not offered. Mobile also helps build the connection between issuer and customer. Satisfaction among customers who use mobile is 54 points higher than among those who do not.
The 2014 U.S. Credit Card Satisfaction Study includes responses from nearly 20,000 credit card customers.
The study was fielded from September 2013 to May 2014.
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John Tews; Troy, Mich.; 248-680-6218; [email protected]
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