Consumers are more concerned than ever about how to protect their payment card data, but they also know they have very little skin in the game because of card issuers' zero liability policies.

"Cardholders know about zero liability and that can work against the financial institutions," says Nicole Reyes, senior fraud prevention analyst for The Members Group. "But those of us in fraud prevention have always known that the cardholders are the first line of defense."

The recent data breaches at Target and other retailers are lighting a fire under the many consumers who are seeing their cards reissued or are nervously scanning their statements for signs of fraud.

TMG saw  "volume spikes in our call centers" from cardholders asking questions about fraud in the wake of the Target breach, says Reyes, who recently authored a report on financial institutions' need to empower consumers in fighting fraud.

Consumers affected by the Target breach are open to suggestions on how to further protect their account data, Reyes says.

"Cardholders are very smart and loyal, and they generally want to help protect their finances," Reyes says.

A consumer wake-up call on payment card fraud was long overdue, she says. Industry security vendors have known for some time that the best approaches to fraud prevention call for involvement from "diligent, aware cardholders" because counterfeiters and hackers get increasingly sophisticated in their attacks on the U.S. card payments system, Reyes says in her report.

So many consumers who had Target cards reissued after the breach are now keenly aware of what happened and are likely open to any new information or suggestions on how to further protect their transactions and card data, Reyes says.

Des Moines, Iowa-based TMG provides payment software and card processing to the credit union and community-based financial institution market. TMG also consults its clients across North America on fraud management, loyalty programs, alternative payment systems and data analytics.

Credit unions and small banks can ask cardholders to send in screen shots of phishing e-mails so the financial institution can alert other customers, the TMG report says. In addition, banks can offer regular educational sessions at branch locations or a local coffeehouse, or host online seminars in which consumers share stories and warn each other.

Card brands and government websites also offer numerous security tips, but banks need to tell consumers where to find that information, the report says.

Consumer fraud tools help minimize losses. Fraudsters used stolen information for an average of 95 days in 2010, but that timeframe was cut in half by 2012, the report states.

But there are still many obstacles to overcome in convincing cardholders to get involved in fraud prevention, Reyes says.

Fraud prevention does not hit home with most cardholders until they are affected by a breach in some manner, Reyes says. It could simply be from obtaining a reissued Target card and having to learn a new PIN or alerting payees that the consumer's card has changed, she adds.

Fraud text alerts are becoming a popular tool for consumers to use, the report says. Transactions are analyzed against risk factors provided by the cardholder and the institution can send a text alert any time a transaction falls outside of the customer's parameters.

"A cardholder can alert his financial institution that he never uses a particular card for transactions of more than $100, or never travels outside of the city where he lives," Reyes says. The financial institution would block any transaction that doesn't fit the cardholder profile, until the cardholder verifies it.

Ultimately, the financial institution best serves its cardholders by setting up a "Layer Your Alerts" marketing strategy to get all of its customers involved in the process of setting up security, the report says.

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