How Much Do You Know about Credit Card Fraud?

Loss prevention professionals should be knowledgeable when it comes to credit card fraud basics.

e-commerce credit card fraud

Credit card fraud is defined by Wikipedia as “a wide-ranging term for theft and fraud committed using or involving a payment card, such as a credit card or debit card as a fraudulent source of funds in a transaction. The purpose may be to obtain goods without paying, or to obtain unauthorized funds from an account.”

Just as the use of plastic for purchases is increasing, so, too, is credit card fraud. According to the Nilson Report in October 2016, global credit card and debit card fraud resulted in losses of $21.84 billion in 2015. Card issuer losses occurred mainly at the point of sale from counterfeit cards, while the largest merchant losses were driven by card-not-present (CNP) transactions when customers buy online or pick up in store.

In 2015, credit card and debit card gross losses accounted for roughly 6.9 cents per $100 in total volume, up from 5.7 cents per $100 in 2014. Retailers are spending an average of $6.47 billion annually on credit card and debit card fraud prevention. It’s interesting to note that EMV (chip) cards introduced in the United States in 2015 reduced existing credit fraud but drove a 113 percent increase in new account fraud, which now accounts for 20 percent of all fraud losses.

Victims of identity theft resulting in unauthorized credit card and debit card fraud hit a six-year high of 15.3 million in 2016. Identity theft fraudsters most often targeted existing accounts. Below are some other interesting credit card and debit card fraud statistics from the Statistic Brain Institute:

  • Percent of Americans who have been victims of credit card fraud: 10
  • Percent of Americans who have been victims of debit card fraud: 7
  • Median amount reported per credit card fraud (in dollars): 399
  • Percent of financial fraud related to credit cards: 40
  • Email as initial point of contact for credit fraud: 48
  • State with highest rates of credit card fraud: Nevada
  • State with highest rates of credit card fraud per 100,000 population: Mississippi

Below are some tips to protect yourself and advise others:

  • Never save payment data on online retail sites.
  • Check your credit card statements and credit reports regularly.
  • Only use debit or credit cards with EMV chips.
  • Beware of card skimmers; examine ATMs and self-pay terminals before using to check for foreign devices or anything unusual.
  • Report suspected fraud to the card issuer immediately.
  • Never carry PINs with you – memorize them.
  • Use only secure, well-lighted, ATMs under video surveillance.
  • When typing in your PIN, hide the numbers with your free hand.
  • Clean stored information off your computer after using. This is specially important when using a public computer.
  • Change log-ins and passwords monthly – a pain for sure, but it’s worth it.
  • Shred sensitive documents.
  • Never give your account information over the phone until you verify the other party’s legitimacy. And NEVER give out your information to someone who calls you.
  • Never click on a website requesting you to “update” your information. Independently contact the requestor to verify. These unsolicited requests are usually scams.
  • Save receipts and verify against statements.
  • Don’t mail sensitive documents from your mailbox using the flag. Use a postal box instead.

It’s too bad that we have to be so paranoid in today’s world. But it’s a fact of life. Basic precautions and common sense can avoid becoming a victim of fraudsters and guard against serious financial losses, not to mention the hassle and red tape to resolve an issue once it occurs. Learn all you can and teach others.


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