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Card fraud now hits nearly one third of consumers worldwide

Of all cardholders - debit, credit, and prepaid - 30% have experienced card fraud in the past five years.

Imagine folded, chopped, and mutilated plastic up to the sky: that’s the pile being generated by cardholder fraud these days.

I’ll let ACI Worldwide and Aite Group quantify the pile just a bit:

Of all cardholders – debit, credit, and prepaid – 30% have experienced card fraud in the past five years.

That’s the #1 takeaway from their latest biennial survey of cardholders in 20 countries worldwide.

If that topline figure isn’t bad enough, 17% of debit and credit card holders say they’ve fallen victim multiple times over that period – up from 13% in the 2014 survey.

Many of the costs to individuals and institutions are pretty obvious: reimbursements of fraudulent transactions, potentially damaged credit ratings, card replacement and security costs. Unsurprisingly, card fraud also contributes to costly customer churn: worldwide, one-fifth of consumers “changed financial institutions due to dissatisfaction after experiencing fraud.”

But, as the survey’s authors note, financial institutions face an additional cost that might not be obvious to the casual observer: worldwide, 40% of consumers use the compromised account less frequently after the fraud.

Rates are higher in the Asia-Pacific region; in Indonesia, it’s a whopping 69%. Bankers call this “back-of-wallet” syndrome: replacement cards get put in the back, as consumers turn to other forms of payment that haven’t been compromised (yet!).

Seventeen countries were surveyed in both 2014 and 2016, and of those, card fraud rose in fourteen. That’s no shock, given that Aite Group has identified a whopping 2,260 relevant data breaches in 2015 alone.

Nations with the highest proportions of victims in 2016 are Mexico (56%), Brazil (49%), and the United States (47%). That’s a change from 2014, when the UAE and China topped the list, with India and the US tied for third.

According to the survey’s authors:

The US is the only country to remain on the top three list both years, due in part to being a laggard in the roll-out of EMV chip cards, with skimming and data breaches continuing to be security challenges.

Of course, this isn’t all the companies’ fault: consumer behavior is part of the problem, too. ACI Worldwide/Aite Group quantified that as well:

54% of consumers globally exhibit at least one risky behavior – such as keeping a PIN with the card – which puts them at higher risk of financial fraud, compared to 50% in 2014.

Can’t exactly see much progress there.

Two tidbits from the drilldown data: 36% of Thai smartphone users sometimes leave their phones unlocked when not in use, and 19% of Italians have carried written PINs along with their phones.

The authors do find some correlation between riskier consumer behavior and higher national fraud rates, noting that “consumer education and well-timed reminders can slowly but surely reduce these risky behaviors.”

3 Comments

About a decade ago, in an attempt to reduce crime rates, the UK decriminalized card fruad under £10,000 in a single transaction.

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I am aware that is how many people described the changes to card fraud reporting at the time…

…but it wasn’t actually *decriminalised*(which would be a statutory matter as far as I can see), was it? And is there any evidence that the changes were made to “reduce crime rates”, or are there more palatable explanations?

Reply

I’ve had two instances of card fraud this year and in both cases the banks were most accommodating in reversing the fraudulent charges . . . but the inconvenience inherent in cancelling a card and replacing it is not insignificant.

In the 2nd instance, a debit card was physically stolen and while the thief successfully managed a $14.99 purchase at a liquor store almost immediately after having stolen the card, his attempt at a $443 purchase at Target shortly thereafter triggered the bank’s fraud monitors and resulted in a freeze being placed on the account and an immediate message to me asking for verification of the authenticity of the charge. I was on vacation at the time, about 1300 miles from home, and getting that card replaced took five days, five days in which I had no access to funds aside from being able to cash one check for $150 on a military base; that doesn’t go far when one is staying in a motel and eating restaurant meals and I spent two days “camped out” in my car at a truck stop while waiting for delivery of a replacement card. Getting a PIN for that replacement card took over five WEEKS!

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