FICO Data Shows the U.S. Credit Card Fraud Incident Rate Rose 17 Percent Over Two Years
October 10, 2013 – FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today released insights from the FICO® Falcon® Fraud Manager Consortium data showing that the U.S. credit card fraud incident rate rose by 17 percent between January 2011 and September 2012, while the fraud dollar to non-fraud dollar ratio remained stable during the same period. The card-not-present (CNP) fraud incident rate grew by 25 percent during the time period, far outpacing the counterfeit fraud incident rate, which grew by 14 percent. CNP fraud, which refers to purchases made without physically presenting a credit or debit card, such as online purchases, accounted for almost half (47 percent) of all credit card fraud.
While the rate of card fraud attempts rose, the average loss per compromised account fell 10 percent during the time period, thanks in part to innovations in FICO Falcon Fraud Manager, which protects 85 percent of U.S. cards.
“CNP transactions are very convenient for consumers, but CNP fraud can be especially complicated to combat,” said T.J. Horan, vice president of global fraud solutions at FICO. “We have been evaluating massive volumes of credit and debit card data for 20 years, looking for changes in consumer buying patterns, and we have invested in innovations that quickly identify CNP fraud, without delaying legitimate purchases and unnecessarily inconveniencing consumers.”
In contrast to credit card fraud, the debit card fraud incident rate was unchanged, and average fraud losses per account dropped by 3 percent. Most debit card fraud occurs at ATMs, grocery stores and petrol stations.
“While debit card fraud isn’t increasing in the US, we’re not seeing the same level of decreases as have been seen in the UK over the past few years,” Horan continued. “But, as EMV standards get implemented in the U.S., we know that fraud will migrate as it has done in other regions of the world.” FICO charted the changes due to so-called “chip and PIN” technology in its European Fraud Map.
Each year FICO studies active payment cards issued in the US and other global markets and uses this data to enhance developments of the analytic models for FICO® Falcon® Fraud Manager.
FICO (NYSE: FICO), formerly known as Fair Isaac, is a leading analytics software company, helping businesses in 80+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption — such as the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com.
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