Fraudsters turn to other methods of attack after transition to EMV

According to a study conducted by Auriemma Consulting Group (ACG) counterfeit card use is still the largest source of fraud and financial loss for issuers, representing more than half of total claims by dollar amount according to the consultancys Debit Fraud Benchmark Study.

However, the that same study shows that shifts in activity to other categories are beginning to materialize: card-not-present (CNP) fraud, which includes online and mobile attacks, grew by 20% quarter-over-quarter in Q2, while account takeover (ATO) fraud, a smaller category with relatively low incident rates, jumped 280%.

Transactions involving EMV cards used at compatible terminals currently account for less than 5% of all debit card purchases, but will increase significantly throughout 2016 as more retailers upgrade their POS systems and more chip cards come into circulation.

As EMV infrastructure expands in coverage, and POS fraud becomes less feasible, fraudsters will focus their efforts on other vulnerabilities in the payments ecosystem, including ecommerce and m-commerce channels.

Fraudsters will also target personal data on an increasing scale to commit ATO fraud, a form of identity theft. These incidents are already growing in severity and levels of financial loss. According to ACGs Debit Fraud Benchmark Study, debit card ATO activity increased sharply in the second quarter of 2015, rising 81% by dollar amount on a per-claim basis.

There is also increasing focus at the industry level on data security and anti-fraud solutions such as tokenization and end-to-end encryption, which mask sensitive cardholder data.