Card not present fraud (CNP) rates continue to increase, the Washington Post reported. 2019 CNP fraud stats within the US aren’t currently available. However, the most recent data shows this kind of eCommerce fraud already cost US consumers $4.5 billion in 2016. Unfortunately, the problem only continues to get worse.
Part of the reason for that is the increasing sophistication of cyber criminals. Today’s dark web is an environment where fradusters can not only trade stolen credit card details for cash but also collaborate on best practices to steal consumer payment data. In it’s report, the Washington Post reports that even members of the Secret Service remain vulnerable to becoming victims.
“I’m pretty confident my credit card information is in cyberspace,” Chris Leone, head of the Criminal Investigative Division of the Secret Service, told the Washington Post. “These guys have gotten so good, they have a checkout box to buy stolen credit card numbers just like on a retail website.”
In addition to the consumer-facing costs, the report notes the huge impact of CNP fraud on the entire eCommerce ecosystem. For starters, the fear of fraud costs merchants large amounts of revenue in the form of false positive declines, a problem that costs many businesses more than they realize. Secondly, in an effort to prevent chargebacks, many merchants resort to high-friction methods of verifying orders — a further headwind to realizing their full potential revenue. Finally, although sellers can enlist help from eCommerce fraud prevention solutions, the necessity can still have a chilling effect on business expansion when it comes to new products or markets.
“The cost of card-not-present cybercrime goes far beyond the billions lost in merchandise. Businesses spend heavily to protect against fraud, hiring security experts, buying software and contracting with outside companies to monitor transactions,” Leone told the Washington Post.
In addition, the report notes there is no surefire way to prevent CNP fraud. However, it also points out that an increasing number of payments providers are developing antifraud solutions, and there are new technological advances to protect consumers every day.
Sources:
https://www.federalreserve.gov/publications/2018-payment-systems-fraud.htm