Despite all the efforts of card brands and the Payment Card Industry Security Standards Council, credit card fraud continues to grow through a variety of methods. The most popular method of fraud appears to be committed through skimming acts. The first half of 2023 has seen a whopping 77% increase in debit cards affected by skimming. Online sellers have become prime targets for fraud and have experienced a whopping 140% increase in credit card fraud over the past three years.
What Are Skimmers
Skimmers are small card-reading devices inserted into payment terminals to steal card information. They are frequently inserted into gas pump readers. They use blue-tooth technology to remotely beam the credit card data to the fraudster. Once the data is captured, the card number, expiration date and security code are sold on the black market to other fraudsters to be used in online transactions. They operate on a small battery and are so cheap to buy that thieves seldom retrieve them. When the battery dies, they move on to another location.
Nearly 120,000 cards have been compromised through skimming in the first half of 2023 as compared to about 70,000 cards in the same first half of 2022. This should put merchants on high alert to monitor their terminals to make sure a skimmer has not been installed. Unattended bank ATMs represent about 33% of skimming incidents. Desktop terminals and gas pumps are the next most popular places to install a skimmer followed by ATMs located inside convenience stores.
Other Types of Fraud
Other types of fraud that are on the rise include scams targeting cardholders directly that dupe them into providing their credit card data. In one of the most daring scams we’ve seen, a fraudster scans obituaries in the newspaper and calls unsuspecting grieving relatives to represent themselves as the funeral home that handled services. They are even clever enough to use Caller ID technology to spoof the funeral home’s name and number. The scheme plays on the emotion of families who are told there is a small balance remaining for services provided to their loved one. Eager to handle the payment by phone, grieving family members gladly hand over their credit card data.
Card-Not-Present Transactions
Fraudulent Card-Not-Present transactions represent a whopping 65% of all credit card fraud losses. This type of fraud primarily occurs with online transactions, phone payments, and manually entered transactions. This is why it costs more when you manually key a transaction. The risk of fraud is exponentially higher.
Geographic Data
Virginia, Texas, New Jersey, Florida, and Colorado have seen increases of 50% or more in credit card compromises in 2023 as compared to the same period in 2022. Virginia and Texas are included in the top five states for compromises. California is the top state for skimming with three times the number of total compromises than the next highest state. The United States, the United Kingdom, and Australia are among the top countries with the highest rates of credit card fraud with the U.S. accounting for around a third of all global fraud losses.
The Bottom Line
By adopting proactive security measures and staying informed about the latest fraud trends, Merchants can combat credit card fraud. Merchants need to be vigilant in watching card readers, payment terminals and onsite ATMs for obstructions that cause customers to have difficulty inserting their card. The best way to avoid this type of fraud is by using contactless Tap N’ Go payment technology. As a consumer, be diligent in who you give your credit card data to over the phone. If you are asked to provide your credit card number over the phone, insist on hanging up and calling the number on your statement or the website of the Merchant. Credit card fraud is a significant threat to consumers and Merchants. Adopting robust security measures is critical for you as a consumer and you as a Merchant.
Merchant Tips to Avoid Credit Card Fraud
EMV Chip Technology: Use chip-enabled cards and dip the chip rather than swiping.
Advanced Authentication Methods: Use two-factor authentication (2FA) for online transactions. This adds an extra layer of security by requiring users to provide additional verification beyond just the card number and CVV.
Behavioral Analysis: Be weary of customers who are too friendly in phone orders. If they ask you to run the card right away, this is an attempt to see if the card works and should raise a red flag. Pay attention to those loitering around payment terminals.
Secure Payment Gateways: Use secure payment gateways that encrypt sensitive data in online transactions.
Training: While everything you have read in this article can help you avoid fraud losses, it is important that you also train those who accept payments in your business.
Who is Aurora?
Aurora Payments is a network of professionals providing Merchants with reliable payment solutions for any industry and any environment. We help businesses increase efficiency and growth. Our proprietary technology provides One Ecosystem - One Contract - One Partner - One Aurora. As a Full-Service Provider (FSP), we have all the products, services, solutions, and support Merchants need - all-in-one place. We’re an organization driven by a passion for helping our Merchants succeed. Interested in learning how you can eliminate credit card processing fees? Send us an email at hello@risewithaurora.com or call us at 833-287-6722. You’ll be saving money in no time!
