FICO a  provider of analytics and decision management technology, has released data showing that card issuers using their FICO® Falcon® Fraud Manager have dramatically cut card-not-present (CNP) fraud losses from credit cards over the last two years, from £28 million in April 2010 to less than £12 million in March 2012

CNP fraud, which includes illegitimate online, mail order and phone transactions, is the most prevalent type of card fraud, accounting for about three-quarters of card fraud in the FICO® Falcon® Fraud Consortium for Europe, which includes 44 million active credit cards. 

“CNP fraud is now the top focus for card fraud across the region, as issuers look for new technology and best practices to stop the most widespread form of card fraud,” said Martin Warwick, FICO’s Fraud Chief in Europe, the Middle East and Africa. 

“FICO’s advanced fraud technology is enabling users to outperform the market. For comparison, industry-wide figures from Euromonitor show only modest declines in CNP fraud from 2010 to 2011, with the largest fall at just 6 percent in the UK.”

 Card Not Present fraud was behind

  • 72% of all accounts victimised by fraud
  • 74% of all card fraud losses in the FICO Falcon Fraud Consortium
  • This was higher than in last year’s data, where the figures were 69% and 72%, respectively

“Criminals are migrating to the easiest way of using compromised cards, which today is the internet,” said Warwick. “For example, fraud as a percentage of internet sales in the UK is 22 basis points (0.22 percent), which is double the rate for credit card transactions overall. In addition, 3D Secure protocols are moving the liability on losses from the retailer to the issuer.

“This puts great pressure on card issuers to resolve the CNP fraud problem, and it’s why issuers are looking at new capabilities in FICO Falcon, such as merchant profiling. As shown in the fraud map of Europe we released last year, countries with the strongest fraud detection systems have reduced fraud relative to countries that are lagging on the technology adoption curve.”

During the analysis window, April 2010 to March 2012, only about 1% of cards studied were victimised by fraud, according to FICO.

FICO’s data comes from card issuers in Germany, the UK, Ireland, the Netherlands, Poland and Switzerland.

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