14 DAY TRIAL // A new report published by predictive analytics and decision management software company FICO shows that the payment card fraud is becoming more and more problematic in Germany.
In 2012, the year on which the study focuses, the total fraud losses exceeded the ones recorded in 2006 by 140%.
Of all the fraud cases observed by FICO in 2012, 70% was card-not-present (CNP) fraud. This type of fraud targets mail-order or online transactions.
“The challenge in Germany is to avoid CNP losses without impacting the customer experience and genuine card use,” noted Martin Warwick, FICO's fraud chief for Europe. “As CNP fraud is spread across multiple merchant categories, card issuers need to gain an in-depth understanding of individuals' specific e-commerce behavior.”
Counterfeit fraud represented 20% of fraud cases. Card-present fraud mainly targeted ATMs, electrical goods, supermarkets, jewelry, and smaller stores that commercialized products such as spirits, beer and wine.
“Criminals try to get cash or goods that they can easily turn into cash. Jewelry and electrical items are always near the top of their shopping lists. One easy way to thwart criminals is to combine analytics with tougher fraud rules around these categories, while relaxing the rules for good customers who are known to shop in these categories while they are abroad,” Warwick noted.
Since it’s not an easy task to monetize stolen credit card information – mainly because it’s becoming more and more difficult to find money mules – crimes such as ATM fraud are still preferred by many criminals.
ATM fraud accounted for a third of all cross-border card-present fraud. The percentage was even higher when it came to domestic card-present fraud.
“There can be legacy system issues with major banks in terms of ATM traffic flows,” Warwick added.
“For example, in the UK our investigations showed that at some banks the internal routing of ATM transactions was bypassing the bank's fraud detection system. Banks need to be confident in their defensive systems and adopt real-time detection to fight fraud effectively.”