Global Risk Technologies, a leading technology company specialising in chargeback compliance, is warning online merchants that the rollout of chip and PIN card protection (EMV) in the United States is set to cause a major shift in credit card fraud to card-not-present (CNP) transactions in the UK and Europe.
On 1st October, the US reaches the deadline set for its liability shift to EMV protection on credit and debit cards. From this date, the party responsible for a chip transaction not being conducted will be financially liable for any resulting card-present counterfeit card losses.
The US is the last major global market to adopt EMV. Historically, countries adopting the technology experienced stark declines in counterfeit card fraud, but witnessed sharp increases in CNP fraud. After adopting Chip & PIN, CNP fraud grew 79% between the liability shift in 2005 and its peak in 2008. In France, CNP fraud increased by around 20% between 2007 and 2011 following the introduction of EMV. Similar trends also played out in Canada and Australia.
Monica Eaton-Cardone, Co-Founder and CIO of chargeback compliance specialist Global Risk Technologies said: “The difference now is that fraudsters have nowhere else to turn besides the established online ecommerce markets in Europe. According to FICO, the US accounted for an incredible 47% of the fraudulent cross-border transactions on UK debit cards in 2014. As the US increases its physical card security, the full force of stolen card monetisation will move online to CNP fraud, ignoring international borders.”
Global Risk Technologies recommends three simple steps that every company of any size can follow to help protect against rising CNP fraud while increasing customer satisfaction:
- Maintain impeccable records – If you have the customer’s signature on file, any fraudulent claim that they “never received the parcel” is easy to disprove.
- Concentrate on customer service – Happy and well-informed customers are more likely to talk to the retailer than head straight to their bank to instigate a chargeback. They’re also likely to spend more too.
- Optimise logistics – Speedy delivery of goods combined with an effective paper trail keeps customers happy and can also help highlight potentially fraudulent transactions. Why, for example, would a customer suddenly double their order and set a new delivery address? Often, if a transaction looks too good to be true, it usually is.
Unfortunately in this global fight against these criminals, small businesses can find themselves a prime target, as fraudsters look to test their anti-fraud technologies and processes. Fraud prevention technologies are key to combatting this rising threat and reducing the likelihood of expensive chargebacks as fraudsters turn to the ‘easier’ target of online fraud.