Fico data shows a boost in US credit and debit card fraud

Source: Fico

FICO (FICO), the leading provider of predictive analytics and decision management technology, today released data from the FICO® Falcon® Fraud Manager Consortium showing a continuing shift towards online, mail-order and telephone-order fraud versus counterfeit fraud over the same period.

In its analysis of losses for credit cards from January 2010 to September 2011, FICO found that card-not-present fraud losses increased at twice the rate of counterfeit card losses.

Though Internet, mail and telephone fraud accounted for the highest total fraud loss and fraud volume, counterfeit fraud has higher average loss per compromised account. The expected introduction of EMV technology in the US promises to boost protection against counterfeit losses. FICO released data in January on European credit cards that showed a 60 percent decline in counterfeit fraud, due in large part to the implementation of chip and pin technology in the United Kingdom.

Regarding debit cards, FICO's analysis shows usage increasing sharply over the period of the analysis, with a 15 percent increase in overall authorization volume (more people are using debit cards), and an increase in techniques such as skimming, where a criminal installs a device at an ATM or self-checkout aisle at a grocery store to collect personal data, like debit card numbers and PINs, remotely. The top three sources for debit card fraud were ATMs, grocery stores followed by automated fuel dispensers. Top merchant categories for credit card fraud were grocery stores, restaurants and online retailers.

"Continued improvements in fraud controls have succeeded in keeping the fraud genie in the bottle; but fraud fraudsters continue to evolve their attempts to circumvent our efforts, adapting to consumer behavior and simply following the money," said Doug Clare, vice president of Product Management at FICO. "More online shopping has created a shift towards more online fraud, which is proving to be a popular, relatively safe and anonymous means for fraudsters to exploit any weakness in fraud systems. Consumers and issuers should remain diligent when using cards for point of sale and ATM transactions."

Clare continued, "It's worth noting that in the period that we studied, only about 1 percent of debit and credit cards were affected by fraud, which speaks to the strength of FICO Falcon Fraud Manager, which protects more than 2.5 billion payment cards worldwide. By historical standards, losses remain low."

The data in the FICO Falcon Fraud Manager consortium represents hundreds of millions of active credit cards and debit cards issued in the US. FICO analyzed its FICO Falcon Fraud Manager consortium to develop the most recent US analytic models for FICO® Falcon® Fraud Manager. These models are now available for FICO clients, and show a marked increase in predictive power compared to previous models.

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