European card fraud losses hit new high - Fico

Source: Fico

FICO, a leading predictive analytics and decision management software company, today published its latest map of card fraud in Europe, showing that card fraud losses in 2013 for the 19 European countries studied reached €1.55 billion.

This figure was a new high, and slightly more than the previous peak in 2008, according to data supplied by Euromonitor International, a provider of global strategic market intelligence.

While the UK experienced £450 million in losses, the highest level since 2008, both France and Greece had higher ratios of fraud losses to card sales, at 7 basis points (.07 percent). The fastest growth of card fraud losses in Europe occurred in Russia, where losses jumped nearly 28 percent since 2012.
"When fraud losses peaked in 2008, UK issuers sharply reduced card fraud through chip and PIN and fraud analytics," said Martin Warwick, a principal fraud consultant at FICO in EMEA, who provided the commentary for the map.

"However, tougher fraud detection policies and thresholds also block more genuine transactions, and now the focus for UK banks and regulators is very much on improving the customer experience. To counteract the resulting increase in fraud, we're beginning to see issuers look to such technologies as interactive, automated customer communication services that contact customers in real time when a transaction triggers a fraud alert. This technology helps balance the need to protect customers from fraud with the need to provide a positive purchase experience."

The UK and France suffered 62 percent of the total fraud losses for the 19 countries in the fraud map, reflecting their higher rates of card usage, which make them targets for criminals. Ten of the countries saw a rise in fraud compared to 2012, while nine stayed the same or saw reduced losses.

"These losses are a wake-up call that should start a new wave of anti-fraud initiatives by regional bodies and card issuers," Warwick said. "After the previous peak, in 2008, this led to new fraud migration patterns. Unfortunately, many organisations do not maintain continuous investment in fraud prevention systems and staff — they invest only when the problem grows. The companies and countries that aren't investing this year will be the new targets for criminal activity."

Comments: (1)

Marite Ferrero
Marite Ferrero - Lumiere LTD - London 05 August, 2014, 08:45Be the first to give this comment the thumbs up 0 likes

The TARGET card breach was a big wake-up call in the U.S.  Small Banks and Credit Unions have started offering the service that enables cardholders to turn ON or OFF their cards. Debit and Prepaid debit cardholders specially find it ideal to be able to control their own card accounts (their own money).

This service can also exist with fraud detection services. Credit cardholders are not specially worried about fraud since they just don't pay if they didn't authorize the transaction/s. So banks should still use fraud detection services for credit card accounts or for cardholders that do not want to use Card ON / Card OFF.

All these services can happily co-exist with chip and pin. It's a win-win situation for banks, their customers and merchants.