More than half of credit, debit and prepaid card users around the world are opening themselves up to fraud and identity theft through risky behaviors that could be completely avoided.
That’s one of the findings of a report released today by ACI Worldwide that looked at credit, debit and prepaid card fraud in 20 countries.
The report, “2016 Global Consumer Card Fraud: Where Card Fraud Is Coming From,” found that 30% of all cardholders globally had experienced fraud in the last five years. Cardholders in Mexico (54%), Brazil (49%) and the United States (47%) experienced the greatest rates of fraud over that time period, while cardholders in Sweden (14%), The Netherlands (14%) and Hungary (9%) experienced the least.
The risky behaviors and rates of fraud don’t necessarily correlate, however. Respondents reported virtually the same rate of risky behaviors across countries, but the rates of fraud varied dramatically. For example, 23% of respondents in Brazil, the country with the second highest rate of card fraud, reported throwing away documents without shredding them, while 22% of respondents in The Netherlands, the country with the second lowest rate of card fraud, did.
The study looked at behaviors such as:
- Responding to emails or calls asking for banking information
- Carrying PINs with cards or writing the PIN on the card
- Shopping or banking online without security software or on a public computer
- Throwing away unshredded documents with account numbers and other personal information
- Leaving smartphones unlocked while not in use
Not All Risk Is Behavior-Related
It turns out EMV technology likely has more to do with fraud rates than cardholder behavior does. EMV stands for Europay Mastercard Visa, the three firms that originally developed the standard. In the U.S., they’re frequently referred to as “chip cards” or “chip credit cards.”
“Europe was much earlier in enabling EMV and having it pushed out at a continental and industry level. As a result, protections have been better [than in countries that were later to adopt EMV technology],” said Andreas Suma, vice president and global lead, fraud and data, ACI Worldwide. “The weaknesses in instituting EMV represents the biggest opportunity for fraud, and as a result we’ve seen more fraud in places like Brazil, and the United States and Mexico.”
According to the report, fraud rates in the U.S. are driven “by the fact that it is a wealthy economy and that card payments are the go-to payment method for most consumers.” That, combined with the prevalence of online shopping and slow adoption of EMV, make the U.S. a gold mine for criminals. Already, the U.S. has seen a doubling of new account fraud, and based on other countries’ experience with EMV adoption, ACI Worldwide’s report said it is expected that card-not-present (CNP) fraud also will increase as the country continues to migrate to EMV.
“It’s generally recognized that there will be a migration of fraud to card-not-present,” Suma said. “The report doesn’t break that out explicitly, but it’s seen as a general trend. Also, as e-commerce explodes … merchants are coming up to speed with solutions and capabilities to defend against fraud, but that is an evolving landscape.”
Once Bitten, Twice Shy?
Data breaches have become almost everyday occurrences, and it can be safely assumed that most consumers’ payment card details as well as other information, such as PINs, emails and addresses have been breached. In the Americas, for example, approximately 53% of U.S. residents received a replacement card in the past year, along with 46% of Mexicans, 30% of Canadians and 45% of Brazilians, according to the report. Some issuers replace cards when a breach is suspected, even when no signs of fraud have been detected on a particular account.
That might not be great news for issuers, as 40% of cardholders who receive replacement cards dramatically reduce their account use. It’s probably not as much a matter of trusting the issuer’s ability to keep their account safe as it is of convenience, Suma said. He theorizes it has a lot more to do with automatic payments.
“A lot of people use their cards for billing purposes for example, and … as you’re waiting for a replacement card, it could be that you’re updating a lot of the payments with another card,” Suma said. “Institutions need to get ahead of this from a customer-experience and customer-service perspective.”
What If You’re a Victim?
When prevention isn’t an option, rapid detection can make all the difference in containing the damage of fraud or identity theft. Sudden changes in your credit scores can be a sign of identity theft (you can see two free credit scores every 30 days on Credit.com), and you’ll want to regularly review your free annual credit reports for errors.
Identity theft victims can file reports with the local authorities, notify their creditors and the credit bureaus and file a complaint with the Federal Trade Commission, among other things. If you’re a victim, you’ll also likely need to dispute any errors you find on your credit reports. You can go here to learn how.)
More on Credit Reports & Credit Scores:
- The Credit.com Credit Reports Learning Center
- What’s a Good Credit Score?
- How to Get Your Free Annual Credit Report