Magazine article American Banker

A Well-Informed Consumer Base Can Help Issuers Fight Fraud

Magazine article American Banker

A Well-Informed Consumer Base Can Help Issuers Fight Fraud

Article excerpt

Byline: Ben Woolsey

Are online shopping habits increasing the chance of credit card fraud?

Probably. Fraud reached record highs last year, and online shoppers took the biggest hit. According to a report released earlier this month by Javelin Strategy & Research, in 2016 fraud increased a staggering 40% for identity card-not-present (CNP) transactions. With Americans now making 51% of purchases online, that increase in online identity theft is especially concerning.

The key to combatting identity theft is consumer education. With a better understanding of why it's on the rise, what can be done to avoid it, and how to mitigate the repercussions of ID theft if it's already happened, people can successfully protect themselves from this rising threat. (And continue with online shopping, which has become nothing less than an American way of life.)

EMV chip cards have played a role. Chip cards are actually more secure than magnetic stripe cards, at least during in-person transactions. Chip cards have eliminated the ability for criminals to counterfeit cards and use them in person at brick and mortar retailers, because the chips and new card readers work together to create a unique token that verifies each transaction.

When that source of revenue dried up, fraudsters had to find other means of making money. Because online transactions only require basic card information and don't require chip authentication, e-commerce became the path of least resistance for card fraud.

Credit card companies generally don't hold customers liable for fraudulent purchases, but the responsibility to notice and promptly report suspicious activity still falls on the customer. …

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