Credit Card Fraud Trends
The state of credit card fraud in 2010
Statistics from the Internet
Crime Complaint Center show that there has been a drastic
increase in fraud reporting between the Agency’s inception
in 2000 and it’s most recent figures of 2009. Most of
this can probably be attributed to the increased awareness
of the Agency and it’s function.
Although their statistics are probably interesting
to a fraud analyst, I wouldn't put much stock in the IC3 numbers
as they relate to credit card fraud. Their Annual
Report shows total losses of only $559.7 Million
and that's across all reported Internet crime. Anything credit
card related is only a small percentage of that:
- Non-Delivery of Merchandise: 11.9% (This relates
in that a consumer might report it as fraud against their
credit card)
- Identity theft: 8.2% (A portion of this could be
credit card fraud)
- Credit card Fraud: 6%
Getting a handle on real credit card fraud amounts
isn't easy. There is a huge disparity among sources.
The credit card industry would like us to believe fraud is
low and merchants would tell you it's high.
Let's take a look at the CyberSource report.
It reports nothing but eCommerce losses.
CyberSource
Those numbers certainly look good. But there's a twist.
Although the percentage of revenue lost to fraud has decreased,
the numbers clearly show that the dollar amount of revenue
lost has increased fairly consistently until 2009, when
we saw a .7 Billion dollar decrease aganst
a .2 percent decrease.
CyberSource
I have no idea what caused the drop in 2009.
If it was just the dollar amount, I would say it was the loss
of sales due to the economy. The drop in the percentage
leads us to believe that we're actually making progress in
our fight. I think we need to see another year or two
to confirm that, especially given the number of recent large
breaches. The Heartland breach announced early that
year comes to mind but, on the other hand, the card data from
those breaches will be out there for a while yet. We, as merchants
may have yet to feel the real impact.
Canada will be exclusively Chip and PIN in October.
If history repeats itself in North America as it did in Europe,
that could have a significant impact on 2011 numbers, if not
2010. I
did a blog post on the reasons for that so feel free to
check it out.
The future?
So far in 2010, we haven't seen any major breaches.
The breached organizations would disagree, of course but,
in comparison to past years, we're looking pretty good so
far. That could be good news as long as the Heartland card
accounts stay in the woodwork.
On the other hand, we're seeing reports of much
more sophisticated scammers. Most of them are targeting
debit cards at ATMs. That doesn't make a big bang for
merchants because the bad guys go for cash. But it might
have a significant impact on the IC3 report next year.
By tweaking the definition of credit card
fraud, we can put numbers all over the place. The good
news for tracking the trend is that. past the IC3, no matter
who's statistics we look at, it's the same story. Credit card
fraud decreased slightly in terms of the percentage of revenue
for 2009. It will be interesting to see the 2010 numbers. |
