Report: Businesses to Lose $7.2 Billion to CNP Fraud by 2020

May 12, 2016

Report: Businesses to Lose $7.2 Billion to CNP Fraud by 2020 Card-not-present fraud losses in the U.S. will reach $7.2 billion annually by the end of 2020 and account takeover fraud will generate another $1 billion in losses, according to a new report. As its name implies, EMV: Issuance Trajectory and Impact on Account Takeover and CNP postulates that the ongoing issuance of chip-enabled payment cards in the U.S. will have a significant impact on both CNP fraud and account takeover fraud as criminals look for easier ways to monetize stolen data. The report, prepared by consultancy Aite Group and commissioned by antifraud technology provider iovation, predicts that counterfeit fraud at the POS will fall from $4.5 billion this year—an all-time high as fraudsters try to leverage their stolen information before the window to commit the crime closes—to less than $1 billion in 2020 when nearly all cardholders will have chip cards in their pockets. And, as it did in the U.K., Canada, Australia and other countries that migrated to the EMV standard, CNP fraud will steadily increase.

“As the U.S. migration to EMV progresses, the combination of continued strong growth in e-commerce, ready availability of consumer data and credentials in the underweb, and disappearing counterfeit fraud opportunity will create a perfect storm that will result in a sharp rise in CNP fraud,” said Julie Conroy, research director at Aite Group. “CNP fraud is already on the rise, and the problem will get worse before it gets better. Financial institutions and merchants must invest in technologies that will help detect fraud, while at the same time maintaining a delightful user experience.”

The Aite/iovation report characterizes the account takeover problem mainly as one for banks. Retailers, insurance companies and other merchants, however, are being increasingly victimized by account takeover fraud, which is difficult to detect because they are using either value stored in the account or a card on file to make what look like legitimate purchases. The problem is becoming so pervasive a special panel discussion at the CNP Expo will be devoted entirely to account takeover fraud. Take a look at our entire agenda and register for the CNP Expo today.