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What Is the Future of Credit Card Fraud?

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Identity theft has become a significant problem in the past few years across the country, and it seems that there is a shifting trend in the ways in which thieves are compromising credit and debit accounts in particular.

As recently as 2010, more than 40 percent of card fraud was taking place with thieves skimming card numbers from bank-owned ATMs, while point-of-sale crimes made up the remainder. But since then, there has been a shift in the methods criminals use with stolen cards to rip off consumers, according to new data from the credit scoring firm FICO. While point-of-sale compromises still make up slightly more than half of these crimes, it seems thieves are relying far more heavily on non-bank ATMs as places to install these fraudulent devices, or else install malware that can collect card data in another way. Now, bank-owned ATMs make up less than 40 percent of these crimes, with non-bank machines approaching nearly 20 percent of all points of compromise last year. Interestingly, the most compromised bank-owned ATMs were located on the East Coast and in major cities in the Midwest.

In addition, experts believe that the recent increase in the use of malware to compromise point-of-sale card readers at major retail stores, and other such devices, may be the wave of the future in terms of how criminals gain access to consumers’ account data, the report said. The reason for this is simple: It’s far less risky to hack into a payment system once and let a computer collect and remotely deliver all the necessary information for account fraud than it is to install a skimming device and later retrieve it, either using Bluetooth technology or physically taking the reader out of the machine.

Further, non-PIN card fraud could increase as well as hackers become more savvy with what is known as “social engineering,” which is essentially a type of phishing scam designed to trick victims into revealing account details through social media, the report said. That in turn will lead to more fraud through signature and card-not-present payments, the latter of which is how most online transactions are conducted.

Because identity theft is becoming so pervasive, it’s important that consumers take the time to closely monitor their monthly statements and bank accounts to make sure no unrecognized items show up. These could be very clear signs of identity theft, and if they’re noticed, consumers should contact the necessary financial institution immediately.

Image: Ryan McVay

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