The Nilson Report displays disappointing fraud statistics, with increased values from 2011-2012.
$11.27 Billion has been lost in 2012 by merchants, card issuers, acquirers and prepaid payment cards, globally. This number is up 14.6% from 2011 with gross fraud losses rising to 5.22¢ per $100.
Card issuers incur losses if authorization is given to the merchant to accept payment on what turns out to be a fraudulent card, however, within the card-present environment, EMV (Europay, MasterCard and Visa - global standard for credit/debit chip cards at POS and ATM terminals) is proved to be a reliable fraud fighter and “the strongest defense against counterfeit cards,” according to Nilson Report, publisher, David Robertson.
For those of us in the card-not-present (CNP) environment, EMV does not provide assistance and the reality is that the wounds of acquirers and merchants are suffered predominantly on card-not-present, internet, Call Center and mail order transactions, because fraudulent chargebacks from end-users are much more difficult to control and become the financial responsibility of these two parties.
With the growth of e-commerce, worldwide, CNP fraud is bound to remain an ongoing battle. We know that it is still dangerously prevalent in Europe, with all sorts of activity being promoted to attempt a counter-attack, such as suggestions made in the fraud report, released by the European Central Bank, last month.
The Nilson Report suggests that PCI DSS is helping to secure the systems through which fraud is enabled, and interestingly, a fraud analysis of Australia, published by the Australian Payment Clearing Association, indicates that CNP fraud dropped by 8% in 2012, an uncharacteristic trend for CNP fraud which was attributed to an increased use of fraud prevention and authentication tools like Verified by Visa and MasterCard SecureCode. This data is curious because it suggests that the prospects for CNP are not totally grim. APCA CEO, Chris Hamilton, warns that fraud cannot be fought in the presence of complacency – perhaps some valuable advice for the rest of us.
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