J.D. Power: More than one quarter of bank customers experienced fraud

Having fraudulent transactions on your bank account can be a scary and frustrating experience, even traumatic. But if you have a bank and financial institution – be it a bank or credit union – that cares about the security of your money, resolving the issue well could give you a lasting peace of mind.

That’s likely why 92 percent of bank customers say they’re likely to stay with their bank after experiencing a fraud issue and having a fraudulent issue resolved, according to the first J.D. Power U.S. Financial Protection Satisfaction Study released Nov. 7.

Survey says more than one in four customers experienced bank account fraud 

The J.D. Power study revealed that 29 percent of bank customers experienced some sort of fraudulent transaction on their bank account during the past 12 months, in a study conducted March through September 2024. A significant number of bank customers under age 40 (42 percent) have experienced some form of checking, savings or debit fraud in the past 12 months.

“Financial fraud is a big problem for banks and credit card issuers, but it also presents an opportunity from a customer experience perspective when it is handled well,” says Jennifer White, senior director for banking and payments intelligence at J.D. Power, in a press release.

How to protect yourself from bank fraud

It makes sense that a scary situation, namely having fraudulent transactions and potentially having money missing from your bank account, can require some advice and guidance. And when a bank representative provides this, they can seem like the hero helping you get back to normal. That could explain why nearly half (46 percent) of customers at banks have a more positive impression of their bank or credit card issuer after having fraudulent activity on their account, according to the J.D. Power survey.

The J.D. Power study found that 26 percent of bank consumers haven’t taken recent steps to secure their bank account. According to the study, reviewing recent transactions for transactions not made by the consumer was the method used most often among those who have taken proactive measures. The study noted that this isn’t preventative. 

The J.D. Power study called the following true fraud prevention tactics, such as: 

• Setting up account alerts
• Using face ID or fingerprint authentication
• Adding two-factor authentication

The study found consumers are using these methods no more than 20 percent of the time.  

“Checking your accounts and transactions on a frequent basis is one way to detect fraud, but to actually prevent it requires stronger passwords, two-factor authentication, and biometrics such as a fingerprint or facial recognition,” says Greg McBride, CFA, Bankrate chief financial analyst.

Bankrate recommends push notifications so that you’re instantly aware of both fraudulent transactions and perhaps incorrect transactions. It also can remind you of that recurring transaction that could be a subscription service that you no longer use but still pay for.

The J.D. Power study found that nearly half (46 percent) of bank customers have received a notification from their bank in the past 90 days to act on fraud prevention measures. 

Bankrate recommends you do the following to potentially protect your account or additional fraudulent accounts being opened in your name:

• Lock your debit card, in the bank’s app, when it’s not in use.
• Check your accounts regularly – daily is ideal. This can potentially prevent additional fraudulent transactions.
• Set up notifications so that you receive alerts of transactions as they happen.
• Have a verbal password on your bank account. This is a password that your financial institution, if it offers this, should ask you when accessing your account via the phone or in person. The verbal password should be something that is nearly impossible for others to get or obtain and easy for you to remember. 
• Put a security freeze on the three credit bureaus (Equifax, Experian and TransUnion) and ChexSystems to protect you because you never know when someone might obtain and use your information to open some sort of account with your information.
• Create a strong password that is made up of letters, numbers and symbols. And never share this password or any code texted to you or a code via an authentication app. 
• Make sure your account information is up to date so that your bank can contact you if it notices suspicious activity. 
• Be aware of current scams. 
• Check your credit report regularly.
• Keep software updated.

It’s important to note that none of these methods can fully protect your account. For instance, a bank might not ask you to lift a security freeze to open a bank account, or a teller might not ask you for your verbal password. 

But using these methods can help you. It just depends on your bank and the situation.

What you should do if you have fraudulent activity on your account 

It’s important to act quickly if you see fraudulent activity on a bank account. Here’s what you should do

Step 1: Contact your bank. Your bank will possibly close a debit card or 

Step 2: File a dispute with your financial institution. For instance, if it involves your debit card then it might be through Regulation E. 

Step 3: Look at your other accounts and consider contacting those institutions to see if they offer additional protections, such as a verbal password, to potentially protect your account. 

Bottom line

Having a fraudulent transaction on your account can happen to anyone. That’s why it’s important to know what to do if you experience a bank transaction that you didn’t make. Locking your debit card in your bank’s online app, for example, could stop a fraudulent transaction from happening in the first place. And monitoring your transactions in real time can help you take immediate action if you notice purchases that you didn’t make. That can help you start the dispute process and get your debit card closed, if the fraud is related to your debit card.