FICO reveals the UK saw Europe’s largest annual jump in card fraud losses for 2015. Most of the
Evolution of card fraud in Europe 2015
18% rise in losses came from online transactions, reflecting the growth in this channel, the ease of accessibility to funds and lower risk for criminals, and the theft of personal data through cybercrime.
The online map, based on data from Euromonitor International, shows that card fraud rose in 10 of the 19 countries studied, with Greece, Denmark, France and Russia posting the highest rises after the UK.
UK Sharp 18% Rise in Card Fraud
UK losses increased by 18% in 2015 over 2014, which equates to £88.5 million of losses. Some 75% (£66.7 million) of that increase was in CNP fraud and £42.4 million was down to e-commerce. Putting it simply, half of the UK increase in fraud is down to the growth in online spend and the digital revolution, as criminals exploit personal and payment details that are retained by an ever increasing connected business landscape.
Sharp 18 percent Rise in Card Fraud in 2015
The UK contributes about 43% of the total card fraud losses across these 19 European countries, and the trends in the UK are a good indicator of what other countries need to protect themselves against.
The rise in UK card fraud equates to an additional £88.5 million lost. Some 75% (£66.7 million) of that increase was in card not present (CNP) fraud, and £42.4 million of CNP fraud came from e-commerce. The UK contributed about 43% of the total card fraud losses across the 19 European countries studied.
“We cardholders are very demanding, and if we don’t get what we want then we let people know in the form of reviews and feedback, not to mention switching cards,” explains FICO fraud consultant Martin Warwick. “Banks want to avoid intervening unnecessarily when customers are shopping on the internet. E-commerce spending in the UK has nearly quadrupled since 2007, so you see why this is such a target for criminals.”
The rest of Europe
As 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.
“The UK, Denmark and France were among the markets where the value lost to fraud as a share of total card payment value did not decrease, and will benefit the most from additional security measures for card payments, and additional investments from merchants and issuers,” said Kendrick Sands, Senior Analyst – Consumer Finance at Euromonitor.
“The further projected increase in online payments over the forecast period suggests additional security measures will be required throughout Europe. 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. If greater security measures are not adopted to combat card not present fraud, the broader advance of card payments over paper alternatives could be negatively impacted.”
France has the highest fraud losses basis points at 8.9 out of the 19 countries in this report, but that is off a level of genuine spending that is just half as much as the UK. France’s card fraud losses grew just 4% over 2014, compared to 18% growth in the UK. Actual card spend in France has reduced by 5% since 2013, which does make a difference to the fraud level.
France has the highest fraud losses basis points at 8.9 out of the 19 countries in this report, but that is off a level of genuine spending that is just half as much as the UK. France’s card fraud losses grew just 4% over 2014, compared to 18% growth in the UK.
Actual card spend in France has reduced by 5% since 2013, which does make a difference to the fraud level. France has always been a leader in terms of Chip & PIN authentication, and was about 12 years ahead of the rest of Europe in embedding this capability at point of sale.
This meant that while France enjoyed low levels of fraud domestically, because criminals could not commit counterfeit fraud, they have had longer to see where the criminals will attack instead.
Denmark has seen fraud continue to increase since 2008 and losses are twice what they were then. Card Not Present (CNP) fraud now makes up 40% of the total losses.
Denmark has an unusually high amount of Lost & Stolen fraud, which now accounts for a staggering 53% of the total losses. As mentioned in the comments for Sweden, this type of fraud should not be happening following a successful rollout of Chip & PIN.
PIN was brought in to specifically make theft of the card more difficult, because it means the card is no good without knowing the PIN. Thus, this type of fraud is either a result of theft that takes place after compromising the PIN, or it’s an unfortunate result of a customer-friendly policy left over from the rollout of Chip & PIN, a policy that means consumers can ‘fall-back’ to signature if they say they can’t remember their PIN.
Based on the fact that Norway reduced Lost & Stolen fraud by 32%, the latter is more likely.
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