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Card Payment Fraud

  • Published:
  • 67 Pages
  • Timetric

Synopsis

  • This VRL report contrasts moves being taken to defraud corporates and individuals using cards and the action being taken to counter the fraud
  • It details types of fraud practised in the market
  • It looks at some country based examples of how technology is being used to fight fraud
  • It examines what collective moves are being taken by industry leaders, stakeholders and associations to fight fraud

Summary

The latest available statistics in 2010 show that globally, card payment fraud recorded extremely high rates of occurrence. Despite the many efforts to reduce and eliminate fraud through building an improved understanding of fraud threats, sharing data on prevention and mitigation benefits, and increasing public awareness with regards to fraudulent card payments, fraud continues to impact the financial industry and global economy. Since consumers are becoming more dependent on card payments, industry leaders, stakeholders and various organisations comprising the card payment industry must develop and implement various strategies to combat fraud. Organisations are working to prevent and mitigate the risk of card payment fraud, as well as reducing its effects by employing the latest technologies and innovations in card payment systems and software, including technologies in fraud detection.

In this report, current statistics on card payment fraud are presented in key countries and regions, including Europe, Asia-Pacific, the US and the UK. These countries and regions have varying rates of card payment fraud and are implementing various strategies and technologies to reduce and eliminate fraud. This report specifically discusses the strategies and practices implemented by leading banks, financial institutions and organisations in order to reduce the impact of card payment fraud. The thoughts and opinions of industry leaders have also been gathered and included in this report to provide an overview of the current situation with regards to card payment fraud. Key points on how banks and financial institutions cope with high rates of card payment fraud are also discussed here. Similarly, the effects of fraud on consumers and how they adapt to it are credited. The report provides an overview of the ways in which awareness is being increased with regards to card payment fraud across all members of the payments industry and cross-border collaborations which aim to share fraud prevention and mitigation measures.

Scope

  • This report shows how and why the cards and payments industry must ensure that the correct checks and balances are in place to face new and inventive attempts to defraud
  • The content provides an overview of the ways in which fraud awareness is being raised across the payments industry
  • It includes advice on detecting fraud, mitigating risks and preventing losses
  • Global examples and statistics are provided

Reasons To Buy

  • View current statistics on card payment fraud from a variety of key countries and regions, including Europe, Asia-Pacific, the US and UK
  • Study the measures introduced by banks and financial institutions to combat fraud
  • Stay ahead of the curve with advice on detecting, mitigating and eliminating fraud
  • Consider the global challenges in relation to card payment fraud

Table of Contents

Executive Summary

List of Figures

List of Tables

1 The rising global challenges in relation to card payment fraud

  • 1.1 Upsurge of the card payment market
    • 1.1.1 Rise of global card users
    • 1.1.2 US: global leader in card-based transactions
  • 1.2 Dimensions of the global card payments crisis
    • 1.2.1 Global card payment fraud shows no signs of declining
    • 1.2.2 Global card fraud victims remain stable in number
    • 1.2.3 Card fraud demonstrates signs of weakness
  • 1.3 Challenges to improving card payments security
    • 1.3.1 Unresolved vulnerabilities of card-based payments
    • 1.3.2 Sophisticated and fast-evolving tactics of card fraudsters

2 Development of card payment fraud

  • 2.1 Defining card payment fraud
    • 2.1.1 Payment fraud in relation to account authorisation
    • 2.1.2 First party vs third party payment fraud
    • 2.1.3 Payment fraud in relation to illegal use of payment instruments
    • 2.1.4 Payment fraud as an act of criminal deception
  • 2.2 Prevailing types of card payment fraud
    • 2.2.1 Fraud by lost and stolen cards
    • 2.2.2 Application fraud
    • 2.2.3 Counterfeit card fraud
    • 2.2.4 Card-Not-Present (CNP) fraud
  • 2.3 Latest trends and anti-card fraud methods
    • 2.3.1 Fiercer card skimming techniques
    • 2.3.2 Malware attacks
    • 2.3.3 Triangulation
    • 2.3.4 Advanced phishing, vishing, SMSishing and Whaling

3 Recent fraud trends and outbreaks in selected major card payments markets

  • 3.1 Card payment fraud in the US
    • 3.1.1 US credit and debit card fraud on the rise
    • 3.1.2 Real card fraud statistics in the US remain scarce
    • 3.1.3 US in danger of becoming a prime target of counterfeit card fraud
  • 3.2 Card payment fraud in the UK
    • 3.2.1 Card payment fraud down 17% in UK
    • 3.2.2 CNP fraud: UK's largest card fraud loss in 2010
    • 3.2.3 UK not complacent despite card fraud decline
  • 3.3 Card payment fraud in the Asia-Pacific region
  • 3.4 Recent predominant shifts in card payment fraud
    • 3.4.1 Card-present fraud to CNP fraud
    • 3.4.2 EMV country to non-EMV country
    • 3.4.3 EMV enabled chip credit cards to magnetic stripe debit cards

4 Detecting card payment fraud

  • 4.1 Fraud prevention vs fraud detection
  • 4.2 The growing challenge on card fraud detection
    • 4.2.1 Exchange of ideas on card fraud detection is severely limited
    • 4.2.2 Detection procedures are always one-step behind the fraudsters
    • 4.2.3 Existing fraud detection tools are short-ranged and obsolete
  • 4.3 Detection and fraud risk management: a starting point
    • 4.3.1 Authentication
    • 4.3.2 Activation process
    • 4.3.3 Transaction behaviour monitoring
    • 4.3.4 Fraud control at the POS
  • 4.4 Overview of the world's cutting edge fraud detection technologies
    • 4.4.1 Proactive risk management from ACI Worldwide
    • 4.4.2 Alaric's fractals product

5 Card payment fraud and the consumers

  • 5.1 Consumers growing fear of card payment fraud
  • 5.2 Consumers increasing vulnerability to fraud
  • 5.3 Consumers battling card payment fraud
    • 5.3.1 Asia-Pacific consumers step up to combat card fraud

6 Card payment fraud, the banking industry and financial institutions

  • 6.1 Latest statistics on card payment fraud
  • 6.2 How does card payment fraud impact banks and financial institutions
  • 6.3 How banks and financial institutions respond to card payment fraud
    • 6.3.1 Card payment fraud risk mitigation
    • 6.3.2 Mitigation measures and tools used in the US
    • 6.3.3 Improving information sharing
    • 6.3.4 Establishment of authority agencies against payment fraud

7 Overcoming card payment fraud

  • 7.1 Dealing with card payment fraud: factors to consider
    • 7.1.1 Types of card payment fraud
    • 7.1.2 Vulnerable data management systems in the card payment industry
  • 7.2 Battling fraud: barriers and challenges
    • 7.2.1 Real time information sharing
    • 7.2.2 Individualised fraud departments
    • 7.2.3 Prompt fraud detection
  • 7.3 Fighting fraud across the globe: specific standards and procedures
    • 7.3.1 Europe: regional collaboration to combat fraud
    • 7.3.2 United Kingdom: fraud rates decreasing
    • 7.3.3 Fraud detection software and prevention solutions
    • 7.3.4 Updated chip cards and increased use of chip and pin technology
    • 7.3.5 US: taking a different route to fight fraud
    • 7.3.6 Payment Card Industry Security Standards Council: a co-operative effort to help reduce fraud
    • 7.3.7 Contactless payments cards - a measure similar to the chip and pin technology

8 Technologies in use to reduce and eliminate card payment fraud

  • 8.1 Fighting fraud through EMV/Chip and pin cards
    • 8.1.1 Magnetic stripe cards to be replaced by chip and pin cards
    • 8.1.2 US debate on migrating to chip and pin cards
    • 8.1.3 Chip and pin cards improvements
  • 8.2 Terminal line encryption to reduce domestic counterfeit fraud
    • 8.2.1 How Malaysia benefited from terminal line encryption technology
  • 8.3 Technologies behind one-time payment cards in combating card payment fraud
    • 8.3.1 A deeper look into one-time card number technology

9 Legal authorities speak on how to deal with card payment fraud

  • 9.1 Payment card industry council: fighting fraud from start to finish
    • 9.1.1 Focusing on increasing card skimming cases
  • 9.2 National Fraud Authority - fighting fraud together
    • 9.2.1 Information sharing among members of the payments industry
  • 9.3 Combined effort of all industry leaders, stakeholders and associations
    • 9.3.1 Working together in the fight against fraud
    • 9.3.2 Improving knowledge and information against fraud

10 Conclusion

List of Tables

  • Table 1: Card fraud evolution in Europe; 1980-2010
  • Table 2: Average total losses per fraud in various regions and sub-regions worldwide
  • Table 3: Annual plastic fraud losses on UK-issued cards (2006-2010)
  • Table 4: Comparison of the security features of the US contactless payment cards, chip-and-pin cards and magnetic strip cards
  • Table 5: Worldwide adoption of EMV/Chip-and-Pin cards and terminals
  • Table 6: Security advantages of one-time payment cards over magnetic strip cards and other contactless payment cards

List of Figures

  • Figure 1: Comparison of Non-Cash Transactions by Region and Changes in Payments Instruments mix, 2001 vs 2009
  • Figure 2: US In-Store Payment Transaction Mix 1999-2010
  • Figure 3: Global Card Fraud and Global Card Transaction Values, 2001-2009
  • Figure 4: Percentage of Organisations Subject to Attempted or Actual Payment Fraud, 2004-2010
  • Figure 5: Fraudulent Application Cases in Australia and Overseas on Australian-Issued Cards
  • Figure 6: CNP Fraud Losses on UK-Issued Cards Dropped by 15% in 2010
  • Figure 7: Fraud Losses on UK-Issued Cards 2000-2010
  • Figure 8: Price Shares of Heartland Payment Systems Before and After Data Breach
  • Figure 9: European Card Fraud Loss Rates
  • Figure 10: Fraud Losses in Various Types of Card Payment Fraud in France, 2007-2009
  • Figure 11: Fraud Losses in Various Types of Card Payment Fraud in the United Kingdom, 2007-2009
  • Figure 12: Card Payments Fraud Losses in the UK, 2000-2010
  • Figure 13: Lost and Stolen Fraud Losses in the UK, 2000-2010
  • Figure 14: US and UK Fraud Losses in the UK, 2000-2010
  • Figure 15: Fraud Figures in the UK, 2004-2008 - A Comparison Before and After Chip-and-PIN Cards Were Implemented
  • Figure 16: Domestic Counterfeit Fraud Rates in Malaysia 2004-2005
  • Figure 17: Credit Card Fraud Rates in Malaysia, 2004-2008
  • Figure 18: Most Effective Ways to Prevent Fraud, Information Security Media Group Survey
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