Thursday, July 25, 2013

Banks Seek Technological Solutions to Reduce the Hundreds of Billions Lost to Fraud

Last February, the FBI busted a 13 person conspiracy that planned to bilk over $200 million from credit card companies.  It included a network of complicit businesses that would access the money and wire it to one of several Asian or Eastern European countries.

Today, US investigators announced the arrest of four Russians and a Ukranian.  They had hacked databases to retrieve information on over 160 million credit card numbers.  The indictment, according to Russia Today, said that Financial institutions, credit card companies and consumers suffered hundreds of millions in losses, including losses in excess of $300 million by just three of the corporate victims, and immeasurable losses to identity theft victims."

Mexico and the United States experience the highest rates of credit card fraud, according to a Forbes report last fall.   In both nations, over 40 percent of card holders describe having experiencing some type of credit card fraud.  Debit card fraud is more difficult, but the two aforementioned countries are near the top of that list as well.  One out of four or more debit card holders in both countries have been defrauded in some way.

Help may be on the way.

This year, US credit and debit issuing companies will start issuing EMV standard cards.  This stands for Europay, MasterCard, Visa.  These cards will start including an extra layer of security in the form of ID chips. 

The process will take years, however, because of the need to update card readers and ATMs.

Banks lose $190 billion per year to fraud, according to another Forbes report.  Industry observers hope that EMV, among other measures, will roll back the heavy losses. 

Until then, organized criminals with technical prowess will continue to plunder banks and consumers alike.

No comments:

Post a Comment