The rate of card fraud is rising around the world despite innovations in fraud prevention and adoption of the EMV standard, according to a new report.
The report, Global Consumers: Losing Confidence in the Battle Against Fraud, was conducted by ACI Worldwide and the Aite Group and surveyed over 6,000 consumers across 20 countries.
It found that just under 30% of respondents have experienced card fraud in the last five years. The fraud is defined as unauthorised activity on the three types of card (debit, credit, prepaid). Just under 20% (17%) have had multiple incidents of fraud in 2016 compared to 13% in 2014.
Source: ACI Worldwide infographic
The report stresses that fraudsters are becoming more sophisticated. It says, “the underground economy for user information has matured so much as to be indistinguishable from a legitimate economy.”
Things like like leaving a smartphone unlocked when unattended have also contributed to the rise in fraud, especially since more people are using mobiles for banking and payments than ever before.
This increased smartphone activity has also led to an increase in app fraud is also on the rise as more people publish sensitive data on social media channels.
Andreas Suma, global lead fraud and data, ACI Worldwide comments:
“Our latest report shows that card fraud remains an issue of deep concern for consumers worldwide. As fraudsters are getting more organised it is fair to say that at this point in time, the assumption should be made that almost all users’ credentials and card information has been compromised.
It is also no surprise that there is a direct correlation between fraud rates and consumer trust and loyalty. As our data illustrates, for financial institutions it is more critical than ever to implement effective fraud prevention solutions.”
Fraud breakdown by country
So where is this happening? Mexico tops the table in 2016 with a card fraud rate of 56% in 2016, up by a quarter (23%) since 2014. Brazil isn’t too far behind with a 49% fraud rate, marking a 19% change between 2014-2016.
Despite its accelerating adoption of EMV chip cards, it’s clearly not fast enough as card fraud in the US is still very high at 47% and still rising – coming in 6% higher than two years ago. The US is actually the only country to remain in the top three list since the 2014 list.
Card fraud in the UK is pretty stable at 29% in 2016, only a one percent increase in the last two years. India’s card fraud rate actually went down by four percent to 37% over the last two years.
Germany (18%), Sweden (14%) and the Netherlands (14%) propped up the table with respectably low increases in fraud.
In fact, European countries in general experience less card fraud than countries in the Americas, mainly due to earlier adoption of EMV and other security advances.
Source: ACI Worldwide infographic
It’s the consumer, stupid.
The report highlighted that consumers can do more to limit their exposure to fraud. Over half (54%) of consumers have exhibited at least one form of risky behaviour such as keeping their PIN with the card, marking a 4% increase from 2014.
Europeans are – surprisingly, given the low card fraud rate on the continent – fairly lackadaisical about doing their utmost to limit fraud.
A quarter of French, three-out-of-ten Spanish and 21% of Dutch respondents said they had left their smartphone unlocked in the last five years when not using it.
Two out of ten Spanish and Italians have used online banking or shopping without security software on a public computer. A further 19% of Italians have admitted to writing down their card PIN and keeping the note next to the card itself (!)
Ben Knieff, senior research analyst, Aite Group said:
“The data demonstrates that while consumer trust is improving, financial institutions must be proactive in their efforts to prevent card fraud in order to retain customers.
Consumer education and customer service remain a challenge for financial institutions, as risky behavior has a direct correlation to experiencing fraud.”
Trust in payments is increasing
The number of people who do not believe their financial institution can protect them against fraud has dropped from 20% in 2014 to 14% this year.
However, 40% of consumers who received replacement cards as a result of a data breach or fraudulent activity use their replacement card less than they used their original card. This actually results in lost interchange and interest revenue from decreased usage.
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