This increase is caused by the recent shift from consumers using traditional credit and debit cards with magnetic strips to EMV (Europay, MasterCard, and Visa) chipped cards. A by-product of this switch is that fraudsters are adapting their techniques from card-present fraud to online schemes since chip technology makes the cards nearly impossible to counterfeit, according to the device intelligence for authentication and fraud prevention provider.
Furthermore, iovation and Aite Group, a research and advisory company, found that CNP fraud will cost retailers and financial institutions USD 7.2 billion in the United States by the end of 2020 and that online credit card fraud increased with 35% since October 2015.
“Since the US EMV shift, we have expected to see a rise in CNP fraud, as this pattern has occurred in other countries adopting the chip cards,” said Julie Conroy, research director at Aite Group. “Moving into the 2016 shopping season where retail transactions traditionally increase and so does fraud, online retailers are on notice to mitigate the increased risk” the researcher continues.
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