Has the Switch to EMV Caused an Increase in Card-Not-Present Fraud?

Has the Switch to EMV Caused an Increase in Card-Not-Present Fraud?

February 1, 2018         Written By John H. Oldshue

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.

The information contained within this article was accurate as of February 1, 2018. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About John H. Oldshue

John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.
View all posts by John H. Oldshue
Featured Low Interest Card
Top Features : 1.25X miles on every purchase; no annual fee; bonus of 20,000 miles once $1,000 is spent in first 3 months
Featured No Annual Fee Card
Top Features : Earn cash back twice. 1% when you buy plus 1% as you pay; 0% APR for 18 months on balance transfers
Featured Bad Credit Card
Top Features : No Annual Fee; Cash Back match at the end of your first year; Social Security Alerts
Featured Fair Credit Card
Top Features : No annual fee; access to higher credit line after making first 5 monthly payments on time
Featured Limited/No Credit
Top Features : No annual fee; reports to major credit bureaus; access to higher credit line after making first 5 monthly payments on time
Featured Cash Back Card
Top Features : No Annual Fee, Bonus Offer, Cash Back