In continuing efforts to crack down on fraud, millions of credit cards in the United States have been migrated to a chip technology that effectively turns them into “smart cards.”
Criminals have become smarter, as technology got more sophisticated: they are now moving from brick-and-mortar stores to the internet.
Last year, the use of stolen card data in U.S. retailer websites, mobile apps, and even dialing call centers in so-called card-not-present transactions climbed 40 percent, a Javelin Strategy & Research report revealed last Wednesday, Feb. 1. The apparent new trend has forced companies to devote bigger funds to counter online fraud.
New Credit-Card Criminal Hotspot
By the end of 2016, nearly 1.81 million merchants in the United States had moved to accommodating chip cards. The new bank-issued cards contain EMV technology intended to be much tougher to counterfeit, thus slashing fraudulent activities in stores.
But times have changed.
“We are seeing more sophisticated type of fraud moving into the online environment,” revealed Erika Dietrich of anti-fraud firm ACI Worldwide.
Criminals have diversified the way they conduct their crimes, with new technology simply altering the kind of fraud being committed.
“Criminals can’t counterfeit as many cards as they used to. So what do they do? They take over your account,” warned Javelin Strategy senior vice-president Al Pascual.
Their survey showed that 15.4 million consumers were hit by identity theft last year, which translated to 2 million more individuals than in 2015. This was a record high since the firm started tracking identity fraud in 2003.
The biggest growth last year was in “account takeover” fraud, which involves a criminal element changing a person’s contact information for an existing account so as to receive new cards and hijack fraud-related notifications.
This effort keeps the real account owner in the dark, so the fraud is particularly hard to catch.
How To Stay Protected Online
This has led retailers to ramp up their online security and protection funds. E-commerce institutions are poised to spend $9.2 billion annually in fraud-tracking solutions by 2020, a 30 percent increase from present.
Here are some ways to protect one’s self from online fraud:
Tweak privacy settings, where only friends can see social media posts and people you do not know are kept out.
Establish new passwords. Veer away from common password patterns and instead develop passwords that are harder to crack. Use unique codes for different accounts.
Use two-factor authentication. This is a code sent to your smartphone or email, a safeguard that will make it harder for criminals to penetrate your account.
Freeze your credit account or set a fraud alert. Once you determine that your account has been compromised, set a temporary fraud alert measure requiring lenders to get in touch with you before opening a new account or approving a transaction.
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Javelin Strategy & Research also reported other findings via Business Wire.
