Overall card fraud losses in Europe have declined slightly over the last five years, but that trend is starting to reverse course, based on new data from FICO and Euromonitor International that points to sharp regional upticks in card-not-present fraud.
Europe’s total card-fraud losses rose 10% last year, with significant surges documented in 10 out 19 European countries Euromonitor studied. Card-not-present fraud accounted for the largest share of losses in affected nations, the companies said in an Aug. 4 press release.
The U.K. suffered the sharpest rise in card fraud, with overall losses up 18% in 2015 over the previous year, fueled mostly by card-not-present fraud, the data said.
Total card fraud losses in the U.K. last year reached £88.5 million (US$116 million), and card-not-present fraud accounted for 75% of it, according to Euromonitor data. Within all card-not-present fraud in the U.K. last year, bogus e-commerce transactions accounted for about half of the total.
Other European nations that registered higher overall card-fraud losses in 2015 were Greece, Denmark, France and Russia.
An overall shift to online shopping in recent years is one reason card fraud is rising, FICO said. But ongoing data breaches and a rise in more sophisticated card crimes also fuel card fraud, the company noted.
Further, banks are reluctant to tighten card-verification procedures, for fear of adding friction to legitimate transactions and losing market share, said Martin Warwick, a FICO fraud consultant, in the press release.
“Banks want to avoid intervening unnecessarily when customers are shopping on the Internet,” Warwick said, noting that in the U.K. alone, e-commerce shopping volume has quadrupled since 2007, becoming a huge source of revenue for card issuers.
Europe’s shift to the higher-security chip-and-PIN technology several years ago also played a role in driving more fraud online, Warwick said. “It isn’t surprising, as Europe pushed more criminals toward card-not-present fraud with the rollout and success of chip-and-PIN at the point of sale."
To prevent the escalation of fraud, banks can fight back with more agile ways of quickly detecting and blocking card fraud online and making stolen card data useless to criminals, Warwick said. Strategies include merchant profiling, adaptive analytics, creating a database of suspicious transaction behaviors and collaborating with other agencies and organizations, he added.
Euromonitor’s researchers agreed.
Technology to improve card security has made some advances in recent years, which is why the total value of losses from card fraud fell to .06% in 2015 from .08% of all card payments in 2015. But the broad shift to online fraud calls for even more innovation.
“While the decline in counterfeit card fraud has been significant from uniform EMV adoption, there has yet to be a similar effort to secure the online space,” said Kendrick Sands, a senior analyst for consumer finance at Euromonitor, in the release.