Online fraudsters have always been a shifty bunch. The worst part is, it’s their chameleon-like nature that is part of their ongoing success, as well as every fraud managers’ nightmare.

According to the Banking Times article, “Criminals shifting to card-not-present fraud because of chip and PIN success,” they are on the move again. Data recently released by FICO, a leading provider of analytics and decision management technology, shows that across Europe card-not-present (CNP) fraud has dramatically increased, accounting for 72% of all fraud losses between March 2009 and March 2011. The big reason for this change? Chip and PIN technology, which has helped reduce counterfeit fraud by 60% over the same period.

In comparison, a similar study conducted three years ago found that ‘card present’ fraud accounted for 60% of Europe’s credit card fraud. But since European banks adopted the smartcard payment system, that number has dropped significantly over the past couple of years.

So, remaining consistent to their adaptive nature, it appears that cyber criminals have shifted their attention to CNP schemes like online fraud, targeting countries and business systems with weaker detection and prevention capabilities, said Martin Warwick, FICO’s Fraud Chief in Europe, the Middle East and Africa.

“Our analysis of the data shines a spotlight on the tremendous change that has occurred in Europe’s fraud landscape.”

While European credit issuers continue to leverage Chip and PIN technology as part of their defensive strategies to fight fraud, the Merchant Advisory Group (MAG) recently rolled out a recommended roadmap for a U.S. electronic payments strategy that includes Chip and PIN adoption.

Such strategies have proven to help reduce card present fraud, but as the report shows, their success has also pushed hackers into new directions. Instead of using the actual credit card to defraud businesses in person, criminals are collecting credit card and personal information and using it to commit a host of online crimes including CNP fraud, account takeover and identity fraud.

As criminals increasingly pursue online fraud opportunities around the globe, businesses that rely on online payments need effective fraud detection tools that protect the growing number of online transactions taking place within the U.K. and across international borders.

Leveraging our fraud database of more than 800 million desktop and mobile device reputations worldwide, iovation performs 6.5 million device reputation checks a day for our customers. A complementary fraud prevention solution like iovation’s ReputationManager 360 provides businesses with unique intelligence and a deeper understanding of each device accessing their website or requesting a transaction, allowing them to make quicker, better informed decisions on all online transactions even if fraudsters try to re-invent how they defraud businesses over the Internet.

Tags: card present fraud, card-not-present fraud, Chip and PIN, CNP, device ID, device reputation, electronic payments, FICO, fraud losses, iovation, Online Fraud, online transactions, ReputationManager 360

This entry was posted on Friday, January 20th, 2012 at 9:57 am and is filed under Financial Services, Online Retail. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.