Bank card fraud is growing as a result of Covid pandemic
According to the latest data from the Nilson report, payment card fraud losses reached $ 28.65 billion worldwide in 2019. The United States alone is responsible for more than a third of the world’s total loss, making it the most vulnerable country in the world to card fraud.
Julie Conroy, a research director for the Aite Group’s anti-fraud and money laundering practices, said, “We estimate the US lost $ 11 billion to credit card fraud by the end of 2020.”
The coronavirus pandemic is also causing explosive growth in card fraud activity.
“What happens in any economic downturn is the attacks become more successful,” warned Julie Fergerson, CEO of the Merchant Risk Council. “So, over the next two to three years, I expect the number of credit card fraud to increase in a pretty significant way.”
Credit card fraud affects consumers, merchants and issuers alike. The economic cost goes well beyond the cost of illegally purchased goods. Organizations often spend millions protecting themselves from fraud.
“Fraud is like an arms race,” said Fergerson. “Regardless of what technology is implemented, the scammers will eventually find a workaround and you will have to keep investing. And that is the cost of doing business.”
While the Fair Loan Settlements Act, the Electronic Funds Transfer Act, and the Truth in Lending Act, the latter two Regulations E and Z, are designed to protect consumers from card fraud, some experts say they are not enough to run smaller businesses to protect against the chargebacks caused by fraudulent transactions.
“For a large company, they can absorb a loss even at a fairly significant loss,” Fergerson said. “If a small one-shop or restaurant suddenly has a loss of $ 10,000, it could be the difference between payroll and non-payroll for that business.”
Credit card issuing companies are looking for technological solutions to stop the fraud. Mike Lemberger, Visa senior vice president and regional risk officer for North America, said Visa is working with financial institutions and merchants to help prevent fraud. The company “stopped $ 25 billion in fraud using Visa AI technology last year,” he said in a statement to CNBC.
However, experts in the field are not optimistic that card fraud can end. “I don’t see any solution to the current construct,” said Colin Sims, CEO of Forter, a fraud prevention company. “As long as money is transferred digitally, it will be a problem.”