25% Increase in Cross-Border Fraud on UK Debit Cards, According to New Report from FICO
Wednesday, 5 August 2015
The percentage of fraudulent transactions on UK debit cards that occurred outside of the UK rose 25% last year, according to data from a large sample of cards analysed by software firm FICO.
Fraudulent cross-border transactions made up close to a third (31%) of all the fraudulent transactions on the 52 million active UK debit cards that were included in FICO’s study, up from 23% on the year before.
“Criminals are now opting for card-not-present and cross-border fraud,” said FICO’s fraud chief in Europe, the Middle East and Africa, Martin Warwick.
“The alarming rise in cross-border fraud demands new technology, such as proximity location services that can identify whether the customer’s mobile is in the same place where the transaction is occurring. The UK reduced cross-border card fraud from £230 million in 2008 down to £80 million in 2011. But cross-border fraud has nearly doubled since then, and it’s time to get it back under control.” he added.
FICO found that the US accounted for a whopping 47% of all fraudulent cross-border transactions on UK debit cards. While ranking first for the number of fraudulent cross-border transactions on UK debit cards, the US ranked just third for the total number of cross-border transactions over the same time period.
“Lack of EMV technology in the US makes it a target for criminals,” said Warwick.
“Criminal organizations are taking the details of compromised UK-issued debit cards and using those fraudulently in the US. This can affect anyone with a UK card that has been compromised, not just those who travel to the US.”
“We are seeing a lot of fraud in the US as criminals try to exploit the lack of EMV protection before it is implemented in the US, and before the liability shift at the point of sale takes effect later this year. Having EMV will make the mag stripe data less appealing to criminals.”
The debit cards which formed the sample used by FICO in their study represented a total of 5.6 billion transactions, with a value of £306 billion. This figure was an increase of spend on last year of 5% and overall, there was a decrease of 7% in the value of fraudulent transactions, falling to £156 million.
Whilst 24% of all debit card transactions take place at ATM machines, these account for just 12% of fraudulent transactions. Despite this, ATMs still came top of the list of merchant categories for fraudulent card use, followed by financial institutions at 12%.
Fraudulent transactions where the card was not present (CNP) accounted for the bulk of such transactions, making up 68% of all debit card fraud, and 84% of cross-border fraudulent transactions. In terms of total fraud losses, CNP accounted for 63% and cross-border fraud accounted for 57%. This was a fall in CNP fraud by 3%, however losses remained flat at £98 million.
“Advances in anti-fraud analytics, like those found in FICO Falcon Fraud Manager, coupled with improvements in the infrastructure such as EMV, have taken a massive bite out of the fraud losses in the UK,” said Warwick.
“But although most cards in the UK are chip cards, chip transactions from these cards account for only 28 percent of fraud. As in other markets, fraud has moved online.” he added.