UK card fraud rose a staggering 18% in 2015, the sharpest rise across the whole of Europe.
According to analysis from FICO, the rise in UK card fraud equates to an additional £88.5 million lost. The UK contributed about 43% of the total card fraud losses across the 19 European countries studied.
FICO said that the spike is due to the ongoing boom in e-commerce in the country, which has nearly quadrupled since 2007. Some 75% (£66.7 million) of it attributable to card not present (CNP) fraud; about £42.4 million of the CNP fraud in turn came from e-commerce.
FICO also said that in working with credit and debit card issuers across Europe, it has seen big changes in the European fraud landscape in general. In fact, 10 of the 19 European countries monitored suffered more card fraud in 2015 than in 2014, with the UK, Denmark and France getting the worst brunt.
“This isn’t surprising, as Europe pushed criminals towards CNP with the rollout and success of chip & PIN at point-of-sale,” said Warwick. “The digital revolution also fueled this migration, creating an online funds kitty that is just too tempting for criminals.”
The financial services industry will either have to find a way to make data useless to criminals, or make more use of fraud detection analysis, according to Martin Warwick, FICO's fraud chief in Europe: “FICO has introduced innovative analytics to try and make card fraud detection as painless as possible for the customer and still detect more fraud,” he said. “These include merchant profiling, adaptive analytics, behavior-sorted lists and collaborative profiling.”
The good news is, a share of total card payments for the researched markets in Europe, total value lost to fraud declined from .08% to .06% from 2010 to 2015, reflecting innovation in card payment security. However, the method of value lost to fraud is shifting to target the transition to online retailing—which will need to make changes of its own. While the decline in counterfeit cards has been significant from uniform EMV adoption, there has yet to be a similar effort to secure the online space.
“When executive dashboards in either retailers or card issuers start flashing red in terms of unacceptable fraud losses, change will have to take place,” Warwick added. “With the underlying trend being fueled by compromises of personal and payment data, banks will find increased pressure to control the increased attack on how they identify and verify (ID&V) customers when they call in to customer services teams.”
Photo © Sergey Nivens