Headlines can be deceiving, especially when statistics are cited. Such is the case in recent reports of the “huge spike in e-commerce fraud” as the result of increased EMV usage in the United States. The conjecture behind the headlines is that card counterfeiters, stifled by chip security, have somehow flipped a switch and repointed their fraud to instantly-and-massively rip off online merchants.
It’s simply not true.
Industry surveys and root data from card brands both verify that e-commerce card fraud rates have declined year over year. The most recent Global Fraud Index of PYMNTS.com cites that e-comm fraud as a percent of e-comm sales peaked during the 2015 holiday season and has been declining ever since. In Q1 2017, the survey found, e-commerce fraud as a percentage of e-commerce sales was 3.6% when a year earlier it measured 5.5%.
That’s exactly the opposite of what’s implied by a credit monitoring company whose March 2017 press release was titled “E-commerce fraud rates spike 33% in 2016”.
Supporting sensational, self-serving claims often involves twisting statistics. The measurement methodologies behind the press release are a case in point. Defining “e-commerce fraud” as the number of attempted fraud attacks instead of percentages of sales is just bizarre. Throwing in fraud associated with packages stolen from porches and sales foregone from false-positive auth declines is equally sketchy.
Fake news aside, one payment fraud niche is growing and bears watching: “fallback fraud”.
Fallback fraud occurs when an EMV chip card is intentionally damaged and the transaction is conducted using the card’s magnetic stripe that’s been overwritten with stolen data. Without sophisticated fraud controls inside the card reader, the transaction might be authorized by an issuer, but result in the merchant taking a loss.
RevChip provide merchants with multiple layers fraud protection including Service Code Correlation, which deters fallback fraud.
EMV need not be a huge expense or a technology hassle. Merchants should be able to preserve their POS marketing programs and implement chip cards and Apple Pay in just a few days. If you agree, check out RevChip.