Online, Mail-Order and Telephone-Order Credit Card Fraud Increased at Double the Rate of Counterfeit Card Fraud

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Credit card users beware. Recently released data from FICO shows a continuing shift towards online, mail-order and telephone-order credit card fraud versus counterfeit card fraud over the same time period.

According to a FICO press release issued in August, the firm conducted an analysis on different types of credit card fraud, revealing that card-not-present fraud losses increased at twice the rate of counterfeit card losses between January 2010 and September 2011.

Credit Card

Although Internet, mail and telephone fraud accounted for the highest total fraud loss and fraud volume, counterfeit fraud has higher average loss per compromised account. What’s truly alarming is the rate at which these types of fraud are escalating. With internet, phone and mail credit card losses doubling the rate of counterfeit occurrences, it stands to reason that criminals are finding more efficient ways of stealing information, rather than relying on phony cards.

“Continued improvements in fraud controls have succeeded in keeping the fraud genie in the bottle; but fraudsters continue to evolve their attempts to circumvent our efforts, adapting to consumer behavior and simply following the money,” said Doug Clare, vice president of Product Management at FICO. “More online shopping has created a shift towards more online fraud, which is proving to be a popular, relatively safe and anonymous means for fraudsters to exploit any weakness in fraud systems. Consumers and issuers should remain diligent when using cards for point of sale and ATM transactions.”

When it comes to debit cards, cards that withdraw directly from a bank account and require a PIN number to complete transactions, FICO’s analysis shows usage increasing sharply over the period of the analysis, with a 15 percent increase in overall authorization volume. Although debit cards are generally more secure when it comes to keeping your personal information secret, criminals are continuing to find new and improved ways to access your money. Techniques such as ‘skimming’ are becoming more prevalent, where a criminal installs a device at an ATM or self-checkout aisle at a grocery store to collect debit card numbers and PINs, remotely. According to the FICO press release, the analysis found that ATMs, grocery stores and automated fuel dispensers were the top three sources for debit card fraud.

As Clare suggests, it should be noted that only about 1 percent of debit and credit cards were affected by fraud during the period analyzed, which “speaks to the strength of FICO Falcon Fraud Manager, which protects more than 2.5 billion payment cards worldwide.”

Here are a few tips for keeping your information private when making credit or debit card transactions:

  • Memorize your PIN numbers; never write them down.
  • Be aware of suspicious people hovering around ATMs, credit card machines, etc. If you feel like something’s up, report it to the authorities and use a different machine.
  • Always take the time to check ATMs and gas pumps for extra devices that may have been placed by fraudsters attempting to skim your card details.
  • Do not use any ATM with loose or missing parts. Inform the bank or gas station of the potential problem and find another location to perform your transaction.
  • Carefully check your credit card statement for unauthorized charges. Better yet, instead of waiting for your statement to be issued, check recent activity online on a daily or weekly basis.
  • Avoid using your debit card for online purchases. It is much more difficult and time consuming to recover lost funds from a checking/savings account than it is to contest charges with a credit card company.
  • Your best bet is to designate one credit card for online purchases only. This will limit exposure and allow you to identify the method of compromise in an efficient manner.
  • Avoid using public or shared computers for online banking or internet purchases.

For further reading: http://www.fico.com/en/Company/News/Pages/08-23-2012a.aspx

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Anna Platz is an Editor at ForTheBestRate.com, a leading mortgage rate research website, as well as the Lead Contributor to GoodCentsSavings.com, a blog about budgeting and personal finance. Anna is immersed in the world of real estate, mortgage, and home financing and is here to provide valuable resources for homeowners and soon-to-be-homeowners on buying and selling real estate, researching a mortgage broker or lender, and securing a home loan. Check back often for news, updates, and remember that you can find today's current mortgage rates at ForTheBestRate.com. My Google Profile+

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