Report: CNP and ATO Fraud on Debit Cards Surge

Nov. 12, 2015

Report: CNP and ATO Fraud on Debit Cards Surge While counterfeit card fraud is still the largest concern to debit-card issuers, the ongoing EMV migration has affected two other types of fraud, according to a new study from Auriemma Consulting Group (ACG). The New York City-based payments consultancy said in its Debit Fraud Benchmark Study that card-not-present fraud increased 20 percent from Q1 to Q2 2015 and, although it started from a much smaller base, incidences of account takeover fraud surged 280 percent during the same period.

ACG warned issuers the EMV migration is exacerbating both measures. In other parts of the world, transitioning to EMV, a technology aimed at card-present transactions, resulted in fraudsters turning their attention to online channels, where it was relatively easier to monetize stolen payment card information. Although a growing number of voices claim the more mature e-commerce market in the U.S. will not experience as violent a surge, Ira Goldman, director of ACG’s Card Fraud Control Roundtable, said the EMV migration there "will also accelerate the migration of fraudulent activity toward other channels and types of attack."

One of those increasingly favored types of attack, Goldman said, is account takeover fraud . As payment card information is protected increasingly by tokenization and encryption, hackers are targeting personal data criminals are using to take over existing accounts (bank accounts, credit card accounts, retailer accounts, etc.) and commit fraud. According to ACG’s report, debit card ATO activity "increased sharply in the second quarter of 2015, rising 81 percent by dollar amount on a per-claim basis."