CNP fraud risk increasingly problematic for issuers

by TMG

by. Brandon Kuehl

TMG Senior Fraud Prevention Analyst Nicole Reyes and I recently co-authored a paper that delves into the current state of card-not-present (CNP) fraud. In it, we tackle the projected growth of CNP fraud as a result of more EMV chip-authenticated transactions in the U.S.

Below is a brief excerpt from the paper, “What Card Issuers Need to Know about Card-Not-Present Fraud.” Click here to read the full paper.

CNP fraud makes up 16 percent of the entire U.S. card fraud picture today, which resulted in more than $5.3 billion in losses in 2013. Much of the CNP fraud growth is fueled by consumer comfort with online transactions. By 2017, U.S. consumers are expected to spend more than $430 billion on e-commerce transactions.

For many years, issuers were somewhat able to shrug their shoulders when it came to CNP fraud. That’s because most losses from fraudulent e-commerce transactions could be charged back to the merchant. Today, however, with increased merchant enrollment in 3D Secure protocol programs, such as Verified by Visa and MasterCard Secure Code, CNP chargebacks have been virtually wiped out.

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