Dive Brief:
- The number of identity fraud victims in the U.S. increased by 16% in 2016 to 15.4 million people, while financial losses hit $16 billion, according to Javelin Strategy & Research's 2017 Identity Fraud Study.
- Javelin notes a 40% rise in card-not-present fraud, and found that the increase in EMV cards and terminals was a catalyst for driving criminals to shift to fraudulently opening new accounts.
- On a positive note, while fraudsters are becoming better at evading detection, consumers with an online presence are getting better at detecting fraud quicker, leading to less stolen overall per attempt.
Dive Insight:
Retail and payments players are putting a lot more effort into fighting fraud than they once did. Yet the problem isn't going away, and instead it seems like fraud activity is starting to shift to avoid and work around tough protection schemes, like EMV chip cards and terminals.
A number of industry experts last year predicted that the EMV implementation would drive fraudsters to focus on e-commerce fraud, and specifically crimes on card-not-present transactions that define e-commerce fraud. That's exactly what seems to be happening. We can perhaps comfort ourselves with the notion that fraud is being spotted more quickly, lowering the average amount of money lost, but it's clear that the industry needs to do more.
New fraud fighting technologies do offer some hope. Companies such as MasterCard and Stripe already have developed artificial intelligence-based services that can analyze numerous signals, trends and bits of data to more accurately detect and prevent fraud.
But, as we are learning in the post-EMV landscape, no single technology approach or service can make fraud disappear completely. Retailers and payment companies need multiple anti-fraud weapons to fight the battle on multiple levels. And above all, when fraud does happen, these companies need to have a customer-first attitude in their responses.
