Credit Card Fraud on the Rise before EMV Switchover
With America on the verge of converting to EMV credit cards in the next few years, fraudsters are trying to get in on last-minute scams. This is particularly true for credit card thieves in Europe, who consider the unsecure American system an easy target.
Allen Friedman, director of payment services at Ingenico, said, “Sixty-seven percent of the UK-issued card fraud is from the US.” This is because the traditional magnetic strip systems used in the United States provide a lower level of identity verification than chip and PIN cards.
The issue is so bad that some credit card companies simply do not trust purchases made in the America.
“Some European issuers have started to decline card-present transaction from the US because the fraud is so high,” said Friedman. “They decline the card [at the point of sale] which causes a problem at the merchant locations.”
The UK has already seen a big hit from the vulnerable credit card system in the United States.
“The overall fraud went way up in UK cards because cards were being counterfeited and used in the US. A lot of counterfeit fraud is from European issuers since the fraud is migrating to the easiest target, and the easiest target now is the US,” commented Friedman.
Carolyn Balfany, senior vice president of product delivery for EMV at MasterCard, believes that the speed in which America adapts EMV technology is going to be its biggest advantage.
“While other countries took 5-10 years to migrate, we think the US will migrate in a more compact timeframe,” said Balfany.
There should be a significant decline in fraud after October 2015, when more than 70% of American credit cards are scheduled to have chip and PIN technology.