FICO, the company that invented the credit score, recently conducted research on debit and credit card fraud in the U.S. The research was conducted from January 2010 to September 2011 and included hundreds of millions of active credit and debit card data. Fraud continues to increase in the U.S. compared to their research in Europe, which had a 60% decline in counterfeit fraud. This was mainly because Europe uses chip and pin technology and the U.S. does not. The largest increase in U.S. credit card fraud was in online shopping. Debit card fraud losses increased more than that for credit cards.
Key credit card fraud findings
The highest fraud loss and fraud volume were from online, mail and telephone order fraud.
Online, mail and telephone order fraud was twice that of counterfeit fraud.
The average per account loss from counterfeit fraud was higher than from online fraud.
The most losses from credit card fraud were from the following merchant categories: grocery stores, restaurants and electronics.
Key debit card fraud findings
Debit card fraud losses increased more than credit card fraud, due to a 15% increase in authorization volume and increase in use of techniques such as skimming. Skimming can occur when you or a clerk swipes your card on an electronic device that looks like the real thing, but isn’t and it stores your debit card number and PIN.
Stolen fraud decreased by 8 percent and had the lowest average fraud loss per account.
Approximately 11 percent of the amount obtained fraudulently was spent internationally.
Most of the losses were from ATMs, grocery stores and automated fuel dispensers.
“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 behavior 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.”
Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.