EMV Card Not Present Fraud Increases at Higher Than Expected Rate in 2016

As expected after the adoption of the EMV chip cards, card not present (CNP) fraud did increase, according to Javelin Strategy & Research. However, rather than the slight uptick that was anticipated, the increase over 2015 was 40%.

Although the mandatory implementation of this technology was due in October of 2015, many merchants didn’t get it up and running until well into 2016. In fact, some still don’t have it fully installed and some financial institutions are still issuing the new cards.

Javelin’s head of security, risk, and fraud Al Pascual told Information Security Media Group that various factors contributed to this much higher than expected number. He says the increase in mobile fraud, compromised payment credentials, and weak authentication have all had a part. Some experts and analysts have accused merchants who are slow to adopt it of not taking customers’ security seriously enough.

Some of them have. In fact, many companies are making multifactor authentication (MFA) available to their users. Many organizations, such as Google, Facebook, Dropbox, and GitHub have started supporting security key technology. It’s a tiny hardware device about the size of your house key that is inserted into the USB port of your computer. Before you are allowed access to your accounts, the key must authenticate. This keeps anyone who may have acquired your login credentials from getting into your accounts unless they physically get ahold of your key too. Some keys also work on mobile devices.

If you don’t have or don’t want to use a key, or that option isn’t available, chose some other available type of MFA; such as having a one-time code sent via text to you.

While using MFA won’t necessarily prevent the cards from being used for CNP fraud, especially for online merchants who don’t support it, you can take other steps to protect your information or react quickly to potential fraud and identity theft. Small steps can lower your pain.

• Consider setting up charge limit alerts on your accounts. The card issuer will send you a text or email message if an amount above your set limit is charged to your account.

• Check your payment card charges often. If you see something suspicious, investigate it immediately.

• Check your credit reports often. If there are accounts listed that you don’t recognize, take steps to figure out what they are and remedy any errors.

• Don’t ignore pre-approved credit applications that arrive at your address in someone else’s name. This could be an indication of identity theft or fraud.

Stolen credit card numbers can still be bought on the dark web and these can be used for CNP fraud. However, there is a bit of a silver lining. EMV does limit the use of cards that are duplicated because the thieves got the information from the magnetic strip.