U.S. CNP Fraud Stares at 32% Increase by Yearend

Oct. 12, 2010

Lingering unemployment—reaching nearly 10 percent in the U.S.—and the increasing ingenuity of thieves will contribute to a 32 percent increase in the number of fraudulent attempts to buy goods on the Internet, according to a new report from fraud prevention technology provider Retail Decisions (ReD). The U.K.-based company predicted online fraud will jump significantly by the end of this year. “In the first six months of 2010, our figures show that attempted ecommerce payment fraud reached an estimated value of $1.14 billion,” Carl Clump, CEO of ReD, said. “We predict this could reach $2.83 billion by the end of the year—increasing by 32 percent compared to the $2.14 billion total recorded in 2009.” The huge potential increase is stands in contrast to the improving situation in the U.K., where ReD predicted a 9 percent fall in the value of attempted CNP fraud this year ( CNP Report Sept. 10, 2010 ). This has been largely due to combined forces of industry initiatives such as chip-and-PIN and the increasing use of sophisticated fraud detection tools by retailers and banks. “This is a stark warning for U.S. merchants and consumers to protect themselves against payment fraud,” Clump said. “Merchants must ensure they have a dynamic fraud prevention solution in place that can adapt quickly to changes in the way fraudsters operate.”