Andy Morris

Is the War on Fraud being won?

07 Mar, 2012 11:46

Two sets of industry statistics were published this week, with different and conflicting information:

BBC quoted statistics from the UK Card Association that plastic fraud losses were down by 7% to £341m, attributed to 41% fall in fraudsters impersonating card holders. Whilst CIFAS reported increase in Account takeover up 18%, account misuse (first party fraud 13%) and identity theft 10%.

So who is actually right and wrong here? OK, I accept that I am strictly not comparing apples with apples here, but I am not in denial. As an industry I recognise the excellent work the trade, industry bodies and joint ventures such as the DCPFU do to tackle fraud, but we still have a huge card fraud problem. Some of us have long memories and can remember when card fraud losses stood at £96m.

Check out the Levi Report published in 1996 if you are interested.

Comments

Added: 07 March, 2012 - 12:47 | Finextra member says:

Andy, you're right, you are not comparing apples with apples and these news stories do not neccessarily conflict with each other. Part of the issue is that first party fraud is frequently counted as debt and therefore is regarded as an asset rather than a liability. Fraud managers are, typically, unenthusiastic to tackle this issue even if given the tools to do so.

The high level stats can look contradictive, you need to get down to the detail level to understand what is really going on.

0 thumb ups! (Log in to thumb up)

Added: 07 March, 2012 - 14:48 | Andy Morris - ACI Worldwide - Watford

Thanks. Putting out a statement that 41% of the fall is attributed to fraudsters impersonating customers is a little ambiguous and misleading from my perspective. Yes fraudsters can use genuine cardholder details to obtain goods or services (impersonation). However, the reality is here we are measuring and talking about third party fraud - fraud not perpetrated by the cardholder. Yet CIFAS reports cite 18% increases in Account Takeover and 10% rises in Identity theft - also third party fraud. The CIFAS measurements aren’t necessarily at the payment (Card) level – which is really the point that I was making in respect of comparing apples with apples in my initial blog.

Finally, not sure I share your views on the first party issue. I think the industry takes the topic very seriously given that it is widely suspected that this type of fraud can also be a vehicle used to finance terrorist activities.

0 thumb ups! (Log in to thumb up)

Added: 07 March, 2012 - 14:59 | Finextra member says:

Your comments on first party fraud don't match my experience from talking to bankers. Maybe they have changed in the last 3-4 years, but previously, the fraud managers were focussed on 3rd party fraud reduction and the debt managers were not interested in potential first party fraud within the debt book.

0 thumb ups! (Log in to thumb up)

Added: 08 March, 2012 - 11:55 | Andy Morris - ACI Worldwide - Watford

A valid and interesting viewpoint. Perhaps we can carry this discussion on offline. Please feel free to contact my office – happy to chat further.