Why are American Consumers at the Highest Risk for Credit Card Fraud?

According to The Nilson Report, the U.S. accounted for 48.2% or $7.86 billion of gross card fraud losses worldwide in 2015, despite only generating only 21.4% or $6.187 trillion of total volume.

But why are U.S. consumers at such a high risk for credit card fraud?

Here are 4 reasons:

Card Saturation

Firstly, there is so much card fraud in the U.S. simply because of the amount of cards in use. The United States is completely saturated with plastic cards. There are close to 2 BILLION American consumers carrying credit/debit cards. 

Late EMV Adoption

The United States were late to the EMV game. Most countries made EMV adoption mandatory years ago, but the U.S. only adopted in 2015. 

The beauty of EMV is the security chip that hides a unique cryptographic key. The EMV chip itself is almost impossible for criminals to counterfeit/duplicate, making credit card fraud virtually impossible.

Online Credit Card Fraud

As more and more countries have adopted EMV cards, fraudsters have taken to targeting online, card-not-present (CNP) transactions. 

The United States is one of the largest online retail markets in the world, so naturally there was a huge increase in CNP fraud with the U.S. adoption of EMV.

Chargebacks

The U.S. has strong consumer protection laws, with one of these being the chargeback rule. A chargeback is set up to protect consumers, and occurs when a cardholder disputes a transaction with their card issuer. 

The card issuer initiates a chargeback against the merchant’s account and the funds are withdrawn. 

However, this instigates the problem of “friendly fraud,” in which customers buy products knowing they will dispute the charge. Friendly fraud is on track to cost will cost merchants upwards of $25 billion a year by 2020!

Checking Account Fraud

It’s easy to see what a problem credit card fraud is in 2019, however checking account fraud is a less known issue for American SaaS applications.

Luckily, a Checking Account Owner Authentication Service (AOA) provides businesses a new fraud mitigation tool that provides real-time insight into whether the person or business whose check payment you want to accept or enroll in a recurring billing plan OWNS that bank account.

For more info on how to Verify Checking Account Owner is Correct, contact Agile Payments