New Research from Telesign Finds Consumers’ Fear of Digital Fraud is on the Rise and Consumers Will Punish Businesses that Don’t Protect Them
Highlights:
- Digital users would go to great lengths to avoid becoming a victim of digital fraud: Nearly one quarter of consumers (23%) shared that they would rather never eat chocolate again or be audited by the IRS than become a victim of digital fraud.
- Fear of digital fraud is on the rise: Half (50%) of consumers surveyed indicated their level of apprehension regarding telephone and digital fraud has increased in the last two years.
- Consumers have high expectations for digital privacy protections: 70% of consumers strongly agree that companies have a responsibility to protect the digital privacy of users, with an additional 24% stating they somewhat agree.
- Strong negative brand impact that can multiply: Nearly half of fraud victims indicate the breach was caused by a brand, resulting in a strong negative brand perception (47%) that can spread when victims tell friends and family not to associate with the brand (44%).
LOS ANGELES – May 11, 2023 – Telesign, the leading provider of customer identity and engagement solutions, today released the 2023 Telesign Trust Index, which reveals consumers are increasingly afraid of digital fraud, and for good reason. Digital fraud has significant financial and psychological repercussions on victims, according to the study. Businesses may find a new reason to fear digital fraud as well. The findings highlight the negative impacts of digital fraud on companies’ brand perception and the bottom line.
The 2023 Telesign Trust Index is a first-of-its-kind study to examine the critical role that trust plays in the digital world. Understanding consumer sentiment around this topic is critical for businesses to build and maintain lasting relationships with their customers. The findings underscore the obligation of companies to ensure privacy protections and trust in every digital interaction, while also highlighting what can happen when companies don’t live up to this expectation. Key takeaways from the study include:
Digital users would go to great lengths to avoid becoming a victim of digital fraud
- Nearly one quarter of consumers (23%) shared that they would rather never eat chocolate again or be audited by the IRS than become a victim of digital fraud.
- 30% of consumers surveyed reported they were victims of fraud in the past three years. Those who spend more time on the Internet and use more digital services are statistically more likely to be victimized.
- 61% of victims report financial losses, and one-third of victims report losses of more than $1,000.
- The impact on victims is not just financial. 40% cite mental health concerns and 44% characterize the incident as being “very impactful” on them.
Consumer fear digital fraud is on the rise
- Half (50%) of consumers polled indicated their level of apprehension regarding telephone and digital fraud has increased in the last two years.
- Strong negative brand impact can multiply, leading to losses in revenue and customer loyalty
- Data breaches, which accounted for 44% of fraud incidents in this study, have a profound, negative impact on brand perception, with almost half (44%) of data breach victims telling friends and family not to associate with the brand.
- 43% of data breach victims personally stopped associating with the brand altogether.
- 30% of data breach victims posted to social media regarding the fraud incident, further amplifying negative brand perceptions.
- 59% of victims, who were initially exposed to fraud on social media channels, indicate they are less likely to use social media altogether. Others report they are less likely to use online banking and payment services applications as a result of their experiences.
Brands are ultimately responsible for protecting their users’ digital privacy from fraud
- There is strong consensus among consumers surveyed (94% agree) that businesses bear responsibility for protecting their digital privacy. 70% strongly agree that companies have a responsibility to protect users’ digital privacy and 24% somewhat agree. Older respondents are more likely to strongly agree with these sentiments.
- A little over half (55%) of consumers polled currently use software to protect their digital privacy. Prior victims of fraud were statistically more likely to use this type of software.
“Trust profoundly impacts how customers perceive and engage with a brand. With fear of digital fraud rising amongst consumers, the value of establishing and maintaining trust in business transactions is critical,” said Kristi Melani, CMO & GTM Strategy of Telesign. “The challenge for today’s consumer is deciding who they can trust. We know they are looking for validation that the companies they engage with are trustworthy. The most trusted companies will be those that employ the latest technologies, such as the use of advanced machine learning, to create environments that we, at Telesign, characterize as having Continuous Trust.”
“Protecting digital identities and building security into daily life is a massive concern for businesses,” said Daniel Newman, founding partner and principal analyst at Futurum Research. “Doing this effectively requires the proper balance between security and user experience. Telesign continues demonstrating invaluable leadership in solving this challenge and making the digital world safer for everyone.”
As a brand built on Continuous Trust™, Telesign recognized a significant gap in the industry—a lack of leadership on what trust means to end-users and the impact it has on brands. To address this gap, Telesign recently introduced the Continuous TrustTM Authority, a collection of resources, insights, and experts working together to help the world become a more trustworthy place, offering a deeper understanding into the critical role of trust in the digital economy. The Trust Index is one of the program components being introduced over the next several months. By bringing together the best minds and technology in this space, the Continuous Trust™ Authority will be a hub for the latest information on fighting fraud.
Telesign’s full suite of Continuous Trust™ solutions help its customers prevent the transmission of 30+ million fraudulent messages each month and protects 1+ billion accounts from takeovers every year, allowing companies and customers to engage with confidence. With powerful machine learning and extensive data science that delivers identity with speed, accuracy, and global reach, Telesign is empowering companies to transact with their customers free of fear, making the promise of the digital economy possible.
Methodology:
This Telesign Trust Index Survey was fielded online and reached a total of n=1,000 respondents. Respondents were U.S. adults aged 18+; a subset of which have been victims of digital fraud within the past three years. The survey was fielded in January 2023 by FINN Partners. The margin of error for a sample size of 1,000 is +/- 3.10 percentage points at a 95% confidence level.
For more information and to download the Trust Index report, click here.
About Telesign
Telesign provides Continuous Trust™ to leading global enterprises by connecting, protecting, and defending their digital identities. Telesign verifies over five billion unique phone numbers a month, representing half of the world’s mobile users, and provides critical insight into the remaining billions. The company’s powerful machine learning and extensive data science deliver identity with a unique combination of speed, accuracy, and global reach. Telesign solutions prevent fraud, secure communications, and enable the digital economy by allowing companies and customers to engage with confidence.
Learn more at www.telesign.com and follow us on Twitter at @Telesign.
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