[Report] Good News and Bad News on the Latest Card Fraud Findings in Europe

- Finance - Sep 02, 2014

Card fraud losses in 2013 for 19 European countries reached €1.55 billion according to predictive analytics and decision management software company FICO.

This figure was a new high, and slightly more than the previous peak in 2008 before the advent of chip and pin, according to data supplied by Euromonitor International, a provider of global strategic market intelligence.

FICO’s Martin Warwick runs down the good news and bad news delivered by this report across Europe:

We’ve seen big changes in the fraud landscape between 2006 and 2013 – both in terms of volume and type of attack. European card fraud losses reached a high in 2013, sparking concerns of a new fraud cycle.

The problem is that fraudsters are like cockroaches – squash them and they’ll go away for a time, but they will come back, and sometimes stronger.

Here is a roundup of good and bad across the continent.

  1. Bad News: Russia had the highest growth rate in card fraud of all the 19 countries in our map, with an overall growth of 28 percent over 2012. This is nearly 10 times the losses seen in 2006, and 365 percent higher than in 2008!
  2. Bad News: In 2013, France had the highest ratio of fraud losses to card sales. Criminals have completely changed their approach and reverted to ID theft (€285 million lost to ID fraud in 2013).
  3. Good News: In 2013, the UK had fraud losses similar to 2009, when levels seemed low after the introduction of ‘tough on fraud’ policies following the peak in losses in 2008. However…
  4. Bad News: UK fraud losses grew 16 percent in 2013. Fraud has increased since 2011 by £110 million, with £80 million in CNP fraud and £9 million in Lost & Stolen. This reinforces the thought that if you can’t compromise the card details, the next best thing is to steal it.
  5. Bad News: When the UK cracked down on fraud again in 2009, criminals realised it was more lucrative to target Sweden, Denmark or Norway than it was to stay put and attack cards at home. Norway has the highest fraud level in the Nordics, with more than five times as much as Denmark, which has the lowest levels of fraud, and nearly half as much again as Sweden. The largest growth has been CNP, which shot up by 39 percent over 2012.
  6. Bad News: Germany really suffered when criminals started looking for new countries to target after the UK got tough on fraud in 2008-9 – fraud there just took off, especially ATM skimming. Germany’s card fraud losses in 2013 were 37 percent higher than in 2008, though slightly below what they were in 2012, and CNP is the most problematic.
  7. Good News: Turkey has a tight grip on fraud, having invested heavily in fraud detection and prevention capabilities across the board although their levels of fraud are relatively low. Turkey’s fraud mix is aligned to Western Europe, with CNP at 65 percent of the total losses. However, the total losses due to fraud have not increased over the last five years, which is impressive.
  8. Good News: Banks in South Africa and the Netherlands are currently using a system of one-off passcodes, texted to customers’ mobiles. Once used, these dynamic passwords are useless to any criminal that gets hold of them. If other banks take advantage of this, it will be a great way to get around the problem of traditional ‘static’ pass codes, which can easily be compromised.

See FICO's interactive map to find out more: http://fico.com/landing/fraudeurope2013/ 

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