Credit Scores and Reports

Infographic: Higher fraud numbers can mislead


Card-not-present fraud increasing in dollar amounts but not necessarily in quantity of fraud instances

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The story arc has become familiar: With the rollout of chip cards, fraudsters have been pushed to exploit other channels more aggressively, especially card-not-present transactions for online and mobile purchases.

The story is not untrue. Card-not-present fraud has indeed been growing year-over-year at a significant clip. In 2011, CNP fraud totaled $2.1 billion, according to financial research firm Aite Group. Just five years later, CNP fraud volume had ballooned 57 percent to $3.2 billion.

But what is seldom reported in tandem with CNP fraud numbers is the rate at which digital commerce as a whole is growing. During the same time period – 2011 to 2016 – Aite reports that retail digital commerce in the U.S. had more than doubled, from $198 billion to $402 billion. That’s a 102 percent increase in e-commerce versus a 57 percent gain in CNP fraud.

Put another way, while the absolute dollar amount of CNP fraud is rising every year, the percentage it represents of all digital transactions is shrinking. In 2012, CNP fraud constituted 1.15 percent of total digital retail volume. But by 2016, that percentage had dropped to 0.82 percent.

Aite Group’s research was based on interviews with 16 large U.S. card issuers, four issuing processors and two payment networks in 2016, representing approximately 70 percent of the credit and debit card issuing markets. An original report containing data through 2015 was released in May 2016, with follow-up data for 2016 supplied to in May 2017.

See related: Poll: Credit card fraud alerts surge, false alarms still common, More infographics

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