Most credit card lenders in the U.S. do a relatively good job of resolving fraudulent account activity once it happens, but do not do enough to prevent this type of crime from occurring in the first place, according to a new study released by Javelin Strategy and Research. In all, credit card fraud costs lenders about $37 billion.
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The study also showed that the best way for banks to mitigate costs related to credit card fraud is to catch it before it takes place, not after, the report said. Further, companies did a poorer job of preventing fraud in 2010 than the year before.
“We have found that prevention features offer the highest return on investment, leading issuers to see that it is imperative to prioritize educating consumers on the current technologies needed for protection,” said Philip Blank, managing director for security, risk and fraud at Javelin. “We all know that the threat landscape is not going to change; however, the way that issuers and consumers respond to those threats will.”
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One of the largest concerns consumers may face in the event of a data breach is not whether their credit card information is exposed, but rather their Social Security number. If thieves gain access to that information, they will have a far easier time opening fraudulent accounts in the victim’s name.