Citibank Credit Card Business Poster

Citibank Credit Card Business Poster

Because more Americans have access to and use the Internet for shopping today than ever before, it is not surprising that credit card fraud, confidence fraud, and financial institutions fraud were ranked among the top seven categories of complaints referred to law enforcement during 2007 (Internet Fraud, 2008). Unfortunately, many banking customers report that they have serious concerns about the security of their credit card number that prevent them from using their credit cards when online shopping (Valentine, 2003).

The context of the study relates to the global financial industry in general and credit card departments of multinational banks such as Citibank in particular. Citi Cards® is part of the global operations of Citigroup Inc., a major global financial services company with approximately 200 million customer accounts in more than 100 countries around the world today (About Citigroup, 2008).

Goals of the Study:

The goals of the study are to provide timely and accurate answers to the following research questions:

What are the most important issues for consumers when considering whether to use a credit card for an online purchase?

What steps can banks take to provide consumers with the information they need to avoid fraudulent credit card transactions?

What are the current and potential future trends in credit card fraud and what can banks do today to help improve the situation?

Outline of Issues to be Considered.

Types of credit card frauds.

Security measures used to defeat credit card fraud and their relative success.

Emerging and needed security measures for credit card fraud.

Why This is an Important Issue.

The incidence of online payment fraud is 30 times higher than payment fraud in physical world transactions and continues to increase (Valentine).

Online payment fraud adversely affects consumer confidence and trust in their credit card brands (Valentine).

Identity thieves use stolen information to open credit card accounts, change current information on legitimate accounts to theirs, add themselves to others' accounts and have cards sent to them, obtain loans, deplete bank accounts and more.

Some identity theft consumers spend hundreds of dollars and many days repairing their good name and credit.

Some victims may lose out on job opportunities, or be denied loans (Identity theft solutions, 2008).

Keywords Used for Literature Review Research:

Keywords and phrases used in the search to date and envisioned for the formal study include: "credit cards," "Citibank," "international credit," "credit card industry," "online credit," "online credit transactions," "online fraud," "identity theft," "honey pot," "banking security," "hackers," "crackers," "terrorism and banking," "bankruptcies" combined with "credit card debt," and so forth.

Research Strategies.

The research progressed in a step-wise fashion, beginning at the top of an inverted pyramid in terms of generality concerning the areas of interest and proceeding more specifically to the issue of defeating credit card fraud at Citibank. Serendipitously identified resources were also incorporated where appropriate. Exclusion criteria included identifying those resources that were less than 10 and preferably less than 5 years old, published in the English language. Two such journal articles are discussed and compared further below.

Valentine, L. (2003). The fraudsters' playground: The Web is becoming more bane than boon as online credit card fraud soars. Several new initiatives may cut the losses. ABA Banking Journal, 95(8), 39-40. In this study, the author emphasizes that, "Fraudulent credit card use is not new, but it has evolved thanks to the internet, which has effectively created a playground for thieves" (Valentine, p. 39). Credit card fraud, though, is not playground for banks for numerous reasons, including: (a) online payment fraud erodes consumer confidence and trust in their brands; for many consumers, a breach of security prompts a knee-jerk reaction of closing accounts and moving to another financial institution; and - the liability for fraudulent transactions shifts to the issuing financial institution with costs ranging between $20 and $30 to process each chargeback. The author also provides a critical review of what initiatives are being taken to prevent credit card fraud citing the pros and cons of each, but also notes that the problem is complex and the situation remains dynamic.

Scott, R. (2007). Credit card use and abuse: A Veblenian analysis. Journal of Economic Issues, 41(2), 567-569. In this study, Scott provides a comprehensive history of the credit card and how its use exploded over the last 20 years and notes that the average American household has eight credit cards in it, and these cards are used to charge almost $2 trillion in purchases of goods and services each year. To help explain the meteoric growth in credit card use, Scott uses the neoclassical consumption theory to show how consumers can use credit cards inappropriately in ways that contribute to the incidence of credit card fraud.

A comparison of these two articles reveals some fundamental differences in reporting strategies, with Valentine using a strictly pragmatic analysis of what is happening to banks and what they have been doing about it in terms of credit card fraud. By contrast, the analysis presented by Scott is theoretical in nature, but both journal articles provide some useful insights into what is taking place in the credit card industry today in terms of fraudulent activity and some of the reasons contributing to its increase in recent years.