Watch Out! CNP Fraud On The Rise

The U.S. is driven by plastic. In 2012, it was estimated that there were 1.2 billion credit cards in the U.S. alone. They’re everywhere, and with changing technologies and consumer trends, credit cards have seen a spike in instances of fraud.

According to FICO, a big data cruncher famous for calculating consumer credit scores, from a period between January 2011 and September 2012, fraud rose by 17%. Fraudulent card-not-present transactions rose 25% during the period.

Card-not-present (CNP) transactions, where the cardholder is not physically present to verify their identity, such as purchasing goods or services online, made up 47% of all instances of credit card fraud.

EMV’s (Europay, Mastercard, Visa) “chip and pin” technology, which embeds a security chip into the credit card to verify validity and requires the purchaser to enter a PIN number, has been largely successful in Europe in cutting down fraud for physical purchases.

In the U.S., the majority of cards are “swipe and sign,” and is less secure in comparison to “chip and pin.” Card data is stored unencrypted on a magnetic strip. If a point-of-sale system is breached or skimmed, the card data transferred from the magnetic strip of “swipe and sign” cards can be much easier to access and to use for fraudulent charges.

Both card technologies face the problem of CNP transaction fraud, which may stem from lax security measures on the cardholder’s part.

Through some crafty social engineering or “phishing,” the data you have sprawled on your social networks may lead criminals to trick you into giving up your payment information.

They may contact you personally through social media or email and lead you to a shady website, and if it’s enticing enough, you may just give up your personal information, along with your credit card numbers.

As commerce moves towards online and mobile, it’s important to keep in mind: protect ya neck - you are the first line of defense against fraud.