The United State accounts for 47 percent of all global credit and debit card fraud despite the truth that it generates only 27 percent of the total volume of purchases and money, according to a current report. Unfortunately, little enterprises generally bear the brunt of credit card fraud from both internal and external threats.
The recent Nilson Report - a respected source of international news and analysis of the credit/debit/prepaid card market - also reveals that payment card fraud losses totaled $3.56 billion last year in the U.S. from all sources including general objective, private label, signature and PIN payment cards.
According to David Robertson, publisher of the report, there are two factors that the U.S. has a disproportionate percentage of the global total losses. "U.S. banks have been slow to adopt newer technologies such as EMV chip cards, and issuers are reluctant to decline card authorization from merchants because they don't want to alienate their cardholder," he explains.
Robertson expounded on the latter point by explaining that competition among U.S. card issuers has reached a point that the typical cardholder has 4 cards in their wallet, so if an issuer declines an authorization the client can just pull out a competitor's card to total the transaction.
For smaller firms, fraud is a quite true dilemma. Identity and data thieves regularly target this group of merchants for the reason that they perceive them to be much less vigilant than larger firms when it comes to stopping information breaches. Usually, small businesses lack strict internal controls, so they might possibly miss warning signs that fraud is taking spot, primarily when it is perpetrated by employees. If the breach requires card fraud or identity theft, the repercussions for the small business can be dire.
In its 2010 Report to the Nations on Occupational Fraud and Abuse, the Association of Fraud Examiners reported that the typical organization loses five percent of its annual revenues to fraud, and that frauds can last a median of 18 months prior to being detected.
All companies - and little enterprises in distinct - need to have to be alert to potential fraud circumstances. For example, data breaches involving credit card processing can be avoided by achieving and maintaining PCI compliance. This implies meeting the Payment Card Market Information Security Standards (PCI DSS) established by the five significant payment card brands. PCI DSS is a set of requirements established to ensure that all merchants who method, shop or transmit credit card facts sustain a secure transaction environment.
Information breach and credit card fraud are issues of concern to all companies, the credit card processors who serve them, issuing banks and credit card networks. Even though there is no law requiring PCI compliance, merchants who do not comply and suffer a information breach can end up paying dearly in the form of fines, expensive audits and card replacement costs. Worse yet, they could suffer crippling if not fatal harm to their organization and personal reputations. When it comes to credit card fraud, the best organization practice is greater secure than sorry.
