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There are two times as many credit card fraud cases involve phone or online transactions than retail sales, according to new data from FICO. Researchers found that sophisticated counterfeit rings have raised the stakes for merchants over the most recent 20 month period.
There have been reported an increase in “skimming,” a technique where criminals tamper with ATMs and payment devices to capture both card details and (PIN) personal identification numbers. Criminals can use magnetic stripe blanks or other stolen cards as “clones,” passing details of a stolen account to a payment device without the victim’s knowing. ATMs, grocery stores, and gas stations topped the list of places where criminals use stolen or cloned debit cards.
Fraud rings usually test the stolen cards with smaller online transactions. The online tests as a “relatively safe” way for thieves to learn whether victims notice extra purchases on their monthly statements.
Researchers at J.D. Power and Associates, where the results of an annual customer satisfaction survey show that nearly a quarter of credit card problems involve fraudulent transactions.
FICO’s numbers show American consumers rely on debit cards more than ever, driving a fifteen percent increase in authorization compared to the previous period studied. Federal rules leave consumers responsible for only $50 of fraudulent debit card transactions if reported within 2 days, though Visa and MasterCard now require member banks to follow tougher “zero liability” rules. Debit card fraud can leave consumers on the hook for bounced check charges or failed bill payment fees while investigators to restore the funds.
The FICO monitored millions of credit card transactions between January 2010 and September 2011. Researchers use the data to develop complex algorithms that protect client issuers and their cardholders from identity theft and fraud. Analysts found fraudulent transactions in only 1 percent of their sample.
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