Wherever one finds commerce, one is also likely to find fraud and theft. Sounds like a fortune cookie, right? It’s pretty much a fact. There will always be people looking for ways to steal information in order to fill their own pockets with other people’s money. With the new EMV chip card technology, would be thieves’ attempts at data theft are often thwarted due to stronger security measures.
In fact, studies conducted in other countries such as Europe and Canada showed a significant decrease in fraud losses right after initial EMV implementation. In 2008-2009, Europe saw a decrease of over $100 million, and when Canada moved to EMV technology in 2011, it also saw a decrease of over $100 million in credit card fraud losses.
However, as we stated at the beginning of this post, where there is commerce, there will usually be fraud and theft. While the new technology makes it harder for thieves to re-use stolen payment data, bad guys are constantly evolving their methods. The industry refers to this as “fraud mutation.” What this means is that because EMV is helping to reduce the number of fraudulent transactions, other methods and targets will be identified and carried out by unscrupulous individuals and groups.
It is expected that as EMV is implemented in the United States, the same type of initial decrease in fraud will occur. We should see fewer incidents of data breaches such as the ones seen at major retailers like Target and Home Depot as well as compliant small businesses, which are much more common than we care know! However, other types of fraud will increase.
For example, card-not present fraud is likely to grow. Both Europe and Canada saw increases in other type of frauds once EMV was implemented, especially in card not present transactions. People tend to shop online more and more these days and it’s not always easy to know if the person using the card is the cardholder or if someone else has the card or card information. Companies are looking for ways to implement better protections for card not present transactions, however, eCommerce is now most criminals’ fraud target.
Similarly, smaller businesses that have not implemented EMV may be targeted. While thieves won’t get millions of records like they could at one of the larger retailers, they could still get some credit card data. And to thieves, it’s all profitable – they will just go after many small non –EMV prepared businesses in order to increase the quantity of data.
Consumer deposit accounts such as checking and savings accounts may also prove to be attractive to fraudsters. There are different standards and checks for these types of accounts. While technology is evolving in order to provide the most secure systems possible, this is still an area that is at risk.
The bottom line is that even though new technologies are helping to prevent fraud, there are always threats out there and thieves are always looking for new ways to exploit security flaws to their benefit. Technology is evolving but it often isn’t fast enough to keep up with crooks. However, there are some things both consumers and businesses can do to reduce the threats.
Businesses should prioritize the EMV implementation, even if it is a bit more costly and time consuming in the short term. It could mean the difference between being targeted in the future and facing a major data breach of your customers’ data. Even a small data breach or fraud accusation can have devastating blows both financially and to a business’ public reputation. Many small businesses cannot endure the cost of an investigation as the penalties and fees stack up – mere PCI compliance is not enough if the business has not taken steps to upgrade to EMV compliant hardware.
For consumers, actions such as changing passwords frequently or making them more complex is a good start to staying one step ahead of would be criminals. Monitoring accounts and credit reports also helps to catch fraudulent activity. Many credit card companies offer free or reduced cost credit monitoring, which usually provides a consumer with alerts on suspect activity. In addition, consumers should only shop on websites that provide a secured connection and avoid financial transactions on unsecured wireless networks.
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