Fraud has escalated this year to nearly $22 billion in losses globally. In other words, for every $100 spent, 6.97 cents was fraudulent, compared to 6.21 cents the year before. The Nilson Report, the top newsletter covering the payment industries, put together the specific fraud metrics.
According to their report, if the global fraud rate was a pie, the US has the largest slice. The United States alone accounted for nearly 40 percent of the gross fraud losses, even though they only generated 22.9 percent of global purchase volume. Simply put, for every $100 spent in the US last year, 11.76 cents was fraudulent.
Since the liability shift last October, fraud levels at retail locations have been reduced. Since fraudsters haven’t figured out how to duplicate EMV technology yet, more merchants have become EMV-ready which deters fraudulent efforts.
That still leaves a very large playing field for fraudsters. Aside from merchants that have not yet updated their systems to EMV, there’s also the online marketplace. E-commerce is a virtual candy land for fraudsters and hackers, where they can purchase items using stolen credit card information and have the goods shipped right to their door.
As the e-commerce marketplace grows, so does fraud.
Fraudsters are getting smarter every day, coming up with clever methods to steal data and make fraudulent purchases. Their advanced systems will often place orders that appear legitimate, only to have merchants bear the cost of the merchandise and chargeback as well as the hassle of the entire process. The best way to combat this fraud is using a software that outsmarts the hackers. The software will scan each order submission, run it through several tests and algorithms and report whether it appears to be fraudulent or legitimate. Some software, like our partner Fraudwatch will guarantee approved orders; reimbursing the merchant if any turn out to be fraudulent.
However, retail merchants are still a target for fraud. It is essential for merchants to upgrade their technology to EMV and stay up to date on the latest security requirements. Fidelity’s experts can advise merchants on the best security practices to prevent fraud at their business.
Fraud may be up for the rest of the world, but your business has the ability be different.
Data Source: The Nilson Report 2015