Plastic card fraud continues to be a growing problem for credit unions and other financial institutions.
The Federal Reserve Board reported a 44% rise in fraud losses across all debit and general-use card transactions from 2013 to 2015—putting the current total at $2.41 billion.
The Nilson Report predicts plastic card fraud will reach $31.67 billion worldwide by 2020.
Unfortunately, plastic card fraud will continue to climb as delays in shifting fraud liability to the retailer compound the problem.
Two recent changes that will affect card fraud:
• Gas station adoption of chip-embedded EMV (Europay, MasterCard, Visa) cards is now pushed back to 2020 instead of the original 2017; and
• For non-EMV merchants, issuers will no longer be allowed chargebacks for purchases under $25 and can now charge back only 10 fraudulent counterfeit transactions per account.
While these changes certainly indicate a continued uphill battle against card fraud, you can take steps to lower your credit union’s risk. Here are four:
1. If you haven’t made the transition to EMV, do it sooner rather than later
Sure, it’s not perfect—and it doesn’t address online fraud—but it’s still the best bet for protecting your credit union and members against card-present fraud.
It’s especially critical as retailer adoption is still not where it needs to be: VISA reports only 28% of U.S. merchants have updated their equipment.
2. Establish success metrics for fraud and understand the levers at your disposal
The only way to prevent plastic card fraud would be to eliminate your plastic card programs.
Since that’s not an option, you need to find the right balance between security and member experience.
Leverage peer benchmarking and networks for insights. Rely on your processor to ensure you’re aligned on expectations and have the information you need to evaluate the cost of fraud versus the cost of solutions.
Recognize the impact of increased spend on your total fraud numbers.
3. Monitor fraud in real time and look for patterns
Fraud evolves constantly and you can’t afford a “set it and forget it” mindset with your protection tools.
Keep your success metrics in mind as you adjust rules in response to changing fraud trends.
4. Leverage industry resources to gain new insights
CUNA Mutual Group Bond policyholders may register to attend CUNA Mutual Group’s plastic card fraud prevention webinar on Feb. 22 at 10 a.m. CST. Attendees will learn about the latest fraud trends and action steps for addressing them.
Plastic card fraud is a reality none of us can entirely escape.
However, instituting proactive risk management measures to regularly monitor and address risks on a daily basis will help lower your credit union’s risk and keep members safe.