Combatting fraud starts with awareness. If community financial institutions (FIs) aren’t aware of fraudsters’ latest tactics, there is little they can do to mitigate their effects. Between November 13 and 19, organizations and individuals alike are uniting for International Fraud Awareness Week. Participating in this event can be as simple as initiating a discussion about fraud prevention.
As Fraud Awareness Week kicks off, it is interesting to note what’s happening in the worldwide card fraud landscape. Recently reported findings from The Nilson Report show global card fraud grew by 20.6 percent in 2015, which means 6.97 cents of every $100 spent on cards was fraudulent. That number is up from 6.21 cents in 2014.
Fraud in the U.S. reached 11.76 cents per $100 last year. The U.S. alone accounted for $8.45 billion of card fraud losses. To put it into perspective, that’s almost 40 percent of gross card fraud losses worldwide.
Growth in card fraud is not expected to slow anytime soon. In fact, worldwide card fraud is expected to reach $31.67 billion by 2020. This would be an increase of 45 percent from 2015. Should the U.S. also follow this expected increase, its card fraud would be in excess of $12.25 billion.
In the ever-evolving world of card fraud, it is important FIs utilize the best defense tactics. These may include:
- EMV chip cards – By issuing chip cards, FIs will likely reduce their risk of counterfeit card fraud.
- Strong organizational risk culture – An FI’s security technology is only as effective as the people managing it. Internal staff should understand what their roles are in combatting fraud.
- Educating internal staff and consumers on fraud tactics – Periodic awareness campaigns can help keep staff and consumers apprised of phishing, smishing and other tools criminals frequently use.
- Expanding consumer engagement methods – When consumers have more ways to interact with their FIs, they may be more likely to alert their FIs of suspicious transactions. Offering online banking and fraud alerts via text or email is a great place for FIs to start.
