Report: Issuers Lost $11 Billion to Card Fraud in 2015
June 9, 2016
Issuers lost nearly $11 billion to card fraud last year, the vast majority of which was accounted for by credit cards, according to a new report from LexisNexis Risk Solutions. While the study did not focus exclusively on card-not-present fraud, it did identify one type of fraud familiar to merchants and issuers alike as especially “pernicious.” While account takeover (ATO) is a problem for merchants, issuers in the LexisNexis survey reported that the rise of mobile wallets has seen the fraud method morph.
“By enabling the use of CNP credentials at physical stores, mobile wallets have provided a mechanism for POS fraud rings to make use of available credentials while maintaining their existing infrastructure,” the authors wrote in the report. “In some cases, they may need to take over fraud victims’ accounts, subverting step-up authentication by diverting bank communication to a channel they control.”
The survey found 75 percent of issuers believe that ATO will become more problematic with the proliferation of mobile wallets. Exacerbating the problem, according to the report, is the ongoing rollout of EMV, which simultaneously makes counterfeiting cards more difficult and vastly increases the number of NFC-enabled terminals deployed at the point of sale, expanding the opportunity for use of mobile wallets.