Mitigating credit and debit card fraud could be challenging since the start of U.S. EMV migration. A new report find issuers experience $10.9 billion in direct annual losses to card fraud overall.
The LexisNexis Risk Solutions card issuer fraud study, Issuers Confront Application Fraud and Account Takeover in a Post-EMV U.S., reveals card fraud losses are topped by credit cards, which account for 71% ($7.6 billion, or $9 per card) of all card fraud, about three times more than fraud from debit cards. Debit accounts for 25% of fraud ($2.7 billion, or $2.80 per card), while, with a lower relative number of cards in the market, prepaid cards contribute to only $0.5 billion in fraud losses, though the rate per card was in the middle of the loss-per-card range at $4.70.
The report notes EMV chip technology represents the strongest anti-fraud protection at the POS terminal. However, as this new model continues to roll out over the next twelve months in the U.S., issuers expect certain fraud types to increase.
Notably, with the window closing on easily replicable magstripe cards, the report forecasts a shift and bump in identity schemes —characterized by the use of synthetic identities and the misuse of true identities.
Card-not-present (CNP) fraud is another significant problem in the U.S., and is expected to increase with or without EMV adoption.
The study detailed two of the most pernicious types of card fraud, application fraud and account takeover, each of which represents 20% of total fraud losses, according to study findings. Fueled by data breaches, counterfeit card fraud is responsible for 16% of total losses. The misuse of payment cards that are lost or stolen (28% of total fraud losses) and non-receipt fraud (15% of total fraud losses) represent the two schemes still likely to challenges issuers’ ability to discern between fraud committed by the cardholder and a fraudster.
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