August 24, 2016
It has been an article of faith in the U.S. that a move to EMV would result in a drastic drop in counterfeit fraud at the POS and a spike in CNP fraud as e-commerce becomes an easier target for fraudsters than physical stores. A new report shows that faith—based on the experience in other international markets as they transitioned to EMV—was warranted. According to the Card Fraud Control Benchmark Study from Auriemma Consulting Group, counterfeit card fraud has reached its lowest level since 2013, falling 18 percent in Q1 from the previous quarter. At the same time, the New York City-based consultancy said, other types of fraud have increased—headlined by a 12-percent jump in CNP fraud, which has become the largest category of fraudulent activity, according to the issuing banks the study focuses on. Also, said Louis Buccheri, senior manager at Auriemma Consulting Group, there is good reason to believe EMV has had a big impact on the change.
“While there is no doubt a shift in fraud to card-not-present as e-commerce continues to grow, what we see here is a pretty clear shift in the distribution toward card-not-present away from counterfeit, in particular,” Buccheri told CardNotPresent.com. “Card-not-present now represents a larger category of fraud. It’s difficult to attribute the increase solely to EMV, but of the 30 issuers represented in the report, we’ve seen significant headway on the EMV migration. So, the data is correlated with EMV adoption.”
Buccheri said the study shows chip-on-chip transactions (a chip card used at an EMV-compliant terminal) still only account for 30 percent of card transactions, so there is room for the expected shift in fraud from counterfeit to CNP to continue as more and more retailers come on line with certified EMV terminals (which has proven to be somewhat of a bottleneck ). The surprise, Buccheri noted, is that “the magnitude of these changes has outpaced expectations, to an extent.”