The credit card companies spend hundreds of millions of dollars rolling out Chip and PIN technology in the UK, but it hasn’t helped the overall fraud picture one bit. This isn’t the first time I’ve discussed this. In fact, I blogged about it back in 2006. The important thing to remember about Chip and PIN is that it was designed to prevent Card Present fraud and it’s done a good job of it. Too good, in fact. But, as is the norm in the world of fraud, we build a 10 foot wall and the bad guys build an 11 foot ladder. Bad guys will always be bad guys and they have to do the bad thing. If they can’t do the bad thing in a brick and mortar store, they’ll go to an easier place – the E-commerce world of Card Not Present transactions.
Back in 2005, CNP fraud losses in the UK were reported to be in the area of 183 million British Pounds. Now, a scant 3 years later, it’s reported at £600m. In fact, there has been a 43% increase in fraud since the introduction of Chip and PIN. And most of it is overseas. From the UK perspective, overseas translates to places like the USA.
I know that the Internet has spawned a Global Economy and that’s a good thing. But I continue to caution Merchant911 members and all on-line merchants against shipping overseas. It just isn’t worth it.
The fraud reports for 2008 are coming in and, once again, the dollars lost to fraud have risen in spite of ll our efforts to control it. We’re looking at $4 Billion in losses to fraud in 2008. But that’s a story for another time.
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Fraud trends, Chip and PIN
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