Has the Switch to EMV Caused an Increase in Card-Not-Present Fraud?
America was once riddled with duplicate credit card fraud. Criminals would replicate data from a card’s magnetic strip and use it on a fake card to complete a transaction. When the country made the switch to EMV technology and smartchip credit cards, that threat began to subside. That’s the good news.
The bad news is that a new problem was created: card-not-present fraud, or CNP fraud. This typically occurs with online or over-the-phone transactions, where the merchant cannot physically inspect the card being used. As fraudsters looked for new ways to use stolen credit card data, many Americans worried that CNP fraud would spike like it did in the UK. Unfortunately, it has but the EMV switch may not be to blame.
According to Radial’s 2017 Fraud Index released yesterday, CNP fraud skyrocketed in many industries: over 300% in both the cosmetic and apparel industries between 2016 and 2017. In fact, CNP fraud rates increased in every industry last year with the exception of footwear.
EMV cards may have fueled some of this growth, but Radial believes it may also be the result of an increase in online shopping. In the last two months of 2017, Americans spent over $1 billion a day online for 58 out of 61 days. It’s no secret consumers are attracted to the convenience of online and mobile shopping, so the increase in CNP fraud may not be entirely from smartchip credit cards.
A study from 2016 revealed 12% of consumers would decrease their online shopping after experiencing card-not-present fraud, and another 12% would reduce their credit card usage altogether. 78% of shoppers wanted more protection for shopping online.
Merchants and credit card processors have worked to reduce CNP fraud in the last two years, with multi-layer security measures and two-step account authorizations. Consumers now have the option to use PayPal, Apple Pay or other platforms to buy products online, creating a buffer between their card information and the website.