Proof EMV works? Payment fraud is shifting

September 16, 2016

It has been nearly a year since the world's largest payment processors put the EMV liability shift into place for tier-one merchants.

It has been nearly a year since the world’s largest payment processors put the EMV liability shift into place for tier-one merchants. Since that time, many retailers made the move to adopt this kind of transaction in their daily operations, regardless of size. And because the ultimate point of the liability shift was to reduce card-present payment fraud by forcing action, it should come as no surprise that the cost fraudulent in-store purchases for adopters has plummeted.

Over the past year, the number of fraudulent purchases made for retailers both online and in the real world has climbed 137 percent, and now eats into about 7 percent of every dollar spent at retailers, according to new data from PYMNTS and Forter. However, it’s worth noting that a lot of these instances of fraud come due to a 186 percent increase in fraudulent online purchases, which aren’t made with the card present, being inserted into a point-of-sale device and verified with a PIN code; all criminals here need is the card number and a few other pieces of information.

EMV is changing the way criminals commit payment fraud.EMV is changing the way criminals commit payment fraud.

Another type of fraud among non-adopters
In addition, the other type of purchase that has seen significant upticks in fraudulent activity over the past year was for food and beverage, the report said. There was a 116 percent increase in this type of fraud globally, but the food and beverage industry is another relatively slow adopter of EMV nationwide.

It should also be noted that these numbers are for global changes, not those within the U.S. specifically, the report said. There has been a 200 percent uptick in fraudulent attacks in the rest of the world, where EMV has long been commonplace.

Why is this happening?
When it comes to explanations for why some types of fraud purchases are up and others are down, one must keep in mind that EMV caused a change in the way criminals make bogus purchases in stores, according to Retail Dive. If it’s no longer enough to swipe a card and provide a phony signature, they were always going to move onto the next option rather than try to crack their newfound EMV problem.

“Fraudsters are moving to the path of least resistance,” Forter chief marketing officer Bill Zielke told the site. “There’s so much effort placed on the EMV rollout in stores. [Criminals] see the online space, where those same security requirements are not present, as a riper segment to go after. It’s about what’s easiest for the fraudster. If they can prey on that [online retail] segment, that’s going to be a better use of their time.”

For all these reasons, plus the shifting consumer habits that accompany widespread adoption, those merchants that haven’t made the step to start relying more heavily on EMV and mobile payments may want to do so in the near future. Not only will this increase the security of most transactions, but it will also help merchants keep up with new expectations.

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