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BizReport : Ecommerce : May 06, 2016

Study: CNP fraud to push $7b within 4 years

Fraud will remain a big problem for brands and retailers for the foreseeable future. That is the takeaway from a new report which indicates that fraudulent transactions in which a card isn't presented (Card Not Present, CNP) to a merchant will push to at least $7 billion by 2020.

by Kristina Knight

"As the U.S. migration to EMV progresses, the combination of continued strong growth in e-commerce, ready availability of consumer data and credentials in the underweb, and disappearing counterfeit fraud opportunity will create a perfect storm that will result in a sharp rise in CNP fraud," said Julie Conroy, research director at Aite Group. Conroy went on to say, "CNP fraud is already on the rise, and the problem will get worse before it gets better. Financial institutions and merchants must invest in technologies that will help detect fraud, while at the same time maintaining a delightful user experience."

Researchers are also forecasting that fraud in which customer accounts are taken over by fraudsters will nearly double - from $611 million (2015) to $1 billion (2020), and counterfeit card fraud is expected to skyrocket to more than $4 billion this year, before falling to about $1 billion by 2020.

"In other countries that preceded the U.S. in widespread EMV adoption, there was a big increase in counterfeit fraud activity during the time period where people transitioned from stripe to chip cards," said Michael Thelander, product marketing manager at iovation. "We are seeing that exact scenario play out in the U.S. as criminals realize their window for perpetrating counterfeit card fraud is rapidly closing, so they are working through their vast piles of compromised cards."

The EMV: Issuance Trajectory and Impact on Account Takeover and CNP report suggests most credit cards (81%) and debit cards (57%) are expected to be EMV compliant this year.

iovation and Aite Group collaborated on the report.

Tags: Aite Group, credit card fraud, ecommerce, ecommerce trends, EMV, iovation, retail trends

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