Fed Shares Payments and Fraud Data at CNP Expo

Fed Shares Payments and Fraud Data at CNP Expo

May 23, 2019

Attendees at today’s CNP Expo in San Francisco took a deep dive into the payment and fraud trends found in the Federal Reserve Payments Studies (FRPS) from 2012-2016. The studies are the most recent examination of the payments and fraud landscape by the U.S. federal government.

Given the wide range of fraud types, the studies look only at third-party gross fraud. More than three-quarters of all fraud during this three-year span came from the card space, said payment risk expert, David Lott of the Federal Reserve Bank of Atlanta.

From 2012-2015, card fraud rates surpassed ACH and check fraud. Credit cards represented the largest amount of fraud, with debit cards and ATM withdrawals ranking second and third, according to the study. By 2015, debit cards represented the largest share of transactions, though they also represented the smallest dollar volume per transaction.

As more EMV chip cards came into play, the study found that card not present represented 40 percent of total fraud. Card-not-present fraud continued to be a favored tactic of fraudsters, which was represented in the 2015-2016 supplement to the study.

The supplement reflected a spike in counterfeit card fraud that shifted to card-not-present fraud, which became the number one source of fraud by 2016.

As e-commerce became more popular for consumers, it became equally as attractive to criminals. In 2016, e-commerce increased in popularity so much that fraudulent payments in the remote channel grew 34.6 percent between 2015 and 2016.

“The nature of the fraud criminal has started to change,” Lott said. The patience now of these large criminal organizations has increased substantially. They are creating synthetic identities, building up their credit scores over years until they can make their big cash out.” 

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