FICO analysis shows a spike in US credit and debit card fraud

FICO Falcon Fraud Manager Consortium

FICO, a provider of predictive analytics and decision management technology, has released data from the FICO Falcon Fraud Manager Consortium which showed a continuing shift towards online, mail-order and telephone-order fraud, versus counterfeit fraud over the same period (view press release).  The company’s analysis of losses for credit cards between January 2010 and September 2011, showed 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 projected introduction of EMV technology in the US is expected to boost protection against counterfeit losses. FICO’s European analysis on European credit cards, releases earlier this year, showed that a 60% decline in counterfeit fraud, due in large part to the implementation of Chip and PIN technology in the UK.

FICO’s data also showed that debit card usage is increasing, with 15% increase in overall authorisation volume, 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, such as debit card numbers and PINs. The top three sources for debit card fraud were ATMs, grocery stores and automated fuel dispensers. Conversely, 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 fraudsters continue to evolve their attempts to circumvent our efforts, adapting to consumer behaviour 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.”

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