Latest Cases of Debit-Credit Cards Fraud

17 February 2018, Bachir El Nakib (CAMS) Senior Consultant Compliance Alert LLC

If you are not worried about Credit Card Fraud – you should be.

Fraud losses from unauthorized purchases or withdrawals on an existing account fell from $14 billion to $12 billion last year, the report says, contributing to an overall decline in fraud losses for 2015. But those stemming from new account fraud increased from $2 billion to $3 billion. 

While increased consumer protections in recent years have helped, victims who have had an unauthorized account opened in their name still spend three times as long unraveling the problem as victims of existing account fraud (15 versus five hours), and have out-of-pocket costs almost five times as high (a mean $252, versus $52).

Debit-Credit card fraud is a form of identity theft in which an individual uses someone else’s debit-credit card information to charge purchases, or to withdraw funds from the account. Credit card fraud also includes the fraudulent use of a debit card, and may be accomplished by the theft of the actual card, or by illegally obtaining the cardholder’s account and personal information, including the card number, the card’s security number, and the cardholder’s name and address. Policing agencies from the local police department, to the U.S. Secret Service are on the job enforcing fraud laws as they related to credit card fraud. To explore this concept, consider the following credit card fraud definition. 

Debit Card Fraud Law and Legal Definition

Debit card fraud refers to a fraud that is committed in relation to debit card accounts by using a debit card to immediately withdraw funds from a consumer’s account. For instance, a perpetrator of this fraud who steals a debit card will use that card to purchase goods from various merchants. Debit card fraud is easy to commit because a debit card works in the same manner as that of a credit card. While making a purchase, the card is swiped and the debit card holder must sign for the purchase without disclosing their personal identification number (PIN). Since most merchants do not ask for identification, a perpetrator of this fraud can simply produce the card and forge the original account holder’s signature. 

Definition of Credit Card Fraud 


  1. The unauthorized use of an individual’s credit card or card information to make purchases, or to remove funds from the cardholder’s account.


1887     The concept of the “credit card” was first discussed in Edward Bellamy’s utopian novel, “Looking Backward.” Many believe modern day credit card fraud to be the natural progression of theft from check fraud. 

What is Credit Card Fraud

The crime of credit card fraud begins when someone either steals a credit or debit card, or fraudulently obtains the card number and other account information necessary for the card to be used successfully. While the actual physical theft of credit cards does happen, modern technology has seen a steep rise in the incidence of intercepting account information electronically. The owner of the account, the merchant from whom card information was stolen or intercepted, and even the card issuer may be unaware of the compromise until the information is actually used to make purchases.

As online shopping and bill paying has skyrocketed in popularity, there is no longer a need to possess a physical credit card or debit card to make purchases, and it is possible even to open a financial account, and obtain credit cards solely through online transactions. Because of this, criminals able to obtain enough personal information about other individuals may use that information to commit credit card fraud by opening new accounts, or having new cards sent to them on existing accounts. 

Elements of Credit Card Fraud

The term credit card fraud is broadly used to refer to the use of a credit card, debit card, or any similar form of credit, to make purchases, or to obtain financial gain with the intention of avoiding payment. This includes identity theft, identity assumption, and fraud sprees. In the eyes of the law, certain elements are required for a financial or identity theft crime to be classified as a form of credit card fraud. These include: 

  • Credit Card Theft: the taking of a credit card, or credit card number, from another person, without the cardholder’s consent, with the intent of using or selling it.
  • Credit Card Forgery: the purchasing of something of value using a credit card, by someone other than the cardholder, or an authorized user, with the intent of defrauding the card’s issuer.
  • Credit Card Fraud: the taking of a credit card, or credit card number, from another person, with the intent to use, sell, or transfer it to another person, or using the credit card or card number to purchase something of value, with the intent to defraud. 

Credit Card Fraud Investigation

Credit card fraud investigation most often begins when a consumer makes a report to local police of the theft or unauthorized use of his credit or debit card. Reporting the crime, or the suspicion that an individual’s account has been compromised, may require the cardholder to sign a sworn statement detailing the disputed transactions, and declaring under penalty of perjury that he did not make the charges he is disputing. Immediately reporting suspected credit card fraud is highly recommended by the banking and credit agencies, as well as the Federal Trade Commission, and law enforcement agencies. 

Review of Disputed Transactions

During its credit card investigation, the card issuer will then review all of the disputed transactions, looking closely at when and where they were made, and whether any of them required a signature. If so, the signature will be compared to the cardholder’s signature on file. Signatures that do not match make quick work of proving a transaction is fraudulent. 

Professional Credit Card Fraud Investigators

Professional investigators of credit card fraud are trained in “electronic backtracking” of electronic and online transactions. These experts in information technology, financial security systems, and forensic accounting use high-tech methods to determine whether stolen card information has been used, either to make purchases, or to open new accounts. Such fraud investigators can often stop the opening and using of secondary accounts, minimizing the damage to the cardholder and card issuer. 

Federal Government Investigators

Both the Federal Trade Commission (“FTC”) and the U.S. Secret Service play significant roles in the prevention and prosecution of credit card fraud. Because of the high incidence nation wide, however, these agencies primarily provide oversight and legal support for state, local, and corporate fraud investigations. The type of action taken by these federal authorities depends on the amount and magnitude of the crime. For example, the FTC takes complaints of criminal credit card activity, connects victims with the applicable consumer protection agencies, and refers the cases to the appropriate law enforcement agencies. If the case involves fraud over the amount of $2,000, however, the FTC will initiate a credit card fraud investigation directly. 

Albert Gonzalez Hack of TJX Companies

American computer hacker Albert Gonzalez is said to have masterminded the hack of 45.6 million credit and debit card number from the TJX Companies (doing business as “TJ Maxx”) in 2006 and 2007. Gonzalez claims a breach of 40 million consumer records stored by CardSystems Solutions, the now-defunct credit card processing company, as well as a host of other high-tech credit card fraud schemes. Albert Gonzalez was finally arrested in May 2008 on charges related to his hacking of the Dave & Buster’s corporate network, which garnered another 5,000 credit card numbers, from which fraudulent transactions resulted in $600,000 in fraudulent transactions.

In 2009, Gonzalez entered into a plea bargain in which he plead guilty to 19 charges against him in the “TX Maxx case,” for which he received a 20 year sentence to federal prison. Two years later, Gonzalez attempted to withdraw his guilty plea, claiming that, at the time of the crimes, he had been officially assisting the U.S. Secret Service in drawing out international cybercriminals. The Secret Service failed to back up his story, however, and Gonzalez is serving out his sentence in Leavenworth prison, with an expected release date of 2025. 

Credit Card Fraud Statistics

Credit card fraud statistics show that, although credit card fraud affects less than one-half of one percent of all credit card/debit card transactions in the U.S., it weighs heavily on the minds of American consumers. This is thought to be due to the media hype of the worst case scenario. Many consumers are unaware that they are protected from liability due to credit card fraud by both federal law and the credit issuers. The reality is that financial institutions and card-accepting merchants bear the financial burden of financial losses due to credit card fraud. For instance, according to Nilson Reports, in 2012, card issuers shouldered a 63 percent share of the fraudulent losses, with merchants taking on the remaining 37 percent.

Other credit card fraud statistics break down as follows: 

  • 2012 credit/debit card fraud losses amount to $11.27 billion: primarily due to use of counterfeit cards at point of sale transactions, and card-not-present transactions done online, through a call center, or through mail order.
  • 2012 credit/debit card fraud gross losses amount to 5.22 cents per $100.
  • As of 2012 retailers spend $6.47 billion annually on credit card fraud prevention, while still incurring $580.5 million in losses.

Computer data breaches account for a large percentage of the information used in committing credit card fraud. The largest credit card data breaches since 2005 include: 




CardSystems Solutions


40 million

TJX Companies, Inc.


94 million

U.S. Veterans Affairs


17.5 million



8.5 million

Fidelity National Information Services


3.2 million

Heartland Payment Systems


134 million

Bank of New York Mellon


12.5 million

Hannaford Bros. Supermarket Chain


4.2 million



12 million

Global Payments


1 million

Source: CSO Online


In 2012, the top three stressors to American consumers were (1) identity theft, (2) credit card/debit card fraud, and (3) national security related to terrorism. Nearly 60 percent of American consumers were very worried about the possibility that someone might obtain their credit or debit card information, and use it to make fraudulent purchases. In addition, 39 percent of American consumers distrusted online security for purposes of banking or shopping. 

Related Legal Terms and Issues 

  • Fraudulent Transaction – Purchases or transfers made by one individual using another individual’s credit card, debit card, or bank account.
  • Plea Bargain – An agreement by which a defendant pleads guilty to a lesser criminal charge, usually to avoid a lengthy and costly trial, as well as to gain a more favorable sentence.

Businesses lose millions of dollars each year to these types of fraud and theft. Training is available to civic groups and businesses that will make their employees more aware and knowledgeable about these types of crimes. The training discusses such topics as the tactics of credit card abusers and how to discourage hot check writing and shoplifting in your place of business.

Credit Card Offenses

There are three criminal offenses in Virginia that involve credit cards:  credit card theft, credit card forgery, and credit card fraud.

Forgery of credit card; classification

A. A person commits forgery of a credit card if the person:

1. With intent to defraud, alters any credit card, falsely makes, manufactures, fabricates or causes to be made, manufactured or fabricated an instrument or device purporting to be a credit card without the express authorization of an issuer to do so, or falsely embosses or alters a credit card, or instrument or device purporting to be a credit card, or utters such a credit card or instrument or device purporting to be a credit card; or

2. Other than the cardholder, with intent to defraud, signs the name of any actual or fictitious person to a credit card or instrument for the payment of money which evidences a credit card transaction.

B. Forgery of a credit card is a class 4 felony. 

Credit Cards Theft

In order to secure a conviction for credit card theft, the government must prove beyond a reasonable doubt that:  (1) the defendant took a credit card or credit card number from another person, (2) the taking was without the consent of the cardholder, and (3) the taking was with intent to either use or sell it.

Mere possession of a stolen credit card is not an offense. The government must also prove that the card or card number was wrongfully taken from its rightful owner or that it was received with the knowledge that it had been taken and with the intent to either use, sell, or transfer it. However, possession of multiple credit cards or credit card numbers of another person without the consent of the cardholder serves as prima facie evidence of a violation of this statute.

A person found guilty of this crime is subject to one to 20 years of imprisonment in a state correctional institution, confinement in jail for up to 12 months, and/or a maximum fine of $2,500. 

Credit Card Forgery

There are three elements to credit card forgery.  Specifically, the government must prove that: 

(1) the defendant bought something of value from a merchant using the credit card,

(2) the defendant was not the cardholder or a person authorized by the cardholder to use the credit card, and

(3) the defendant intended to defraud the issuer.

The punishment for credit card forgery is imprisonment in a state correctional institution from one to 10 years, confinement in jail for up to 12 months, and/or a maximum fine of $2,500

Credit Card Fraud

In order to secure a conviction for credit card fraud, the government must prove that: 

(1) the defendant took a credit card or credit card number from another person,

(2) the taking was with intent to use, sell or transfer it to a person other than the issuer or cardholder,

(3) the defendant used the credit card or credit card number to buy something of value, and (4) the defendant had the intent to defraud.

If the value of everything obtained by the defendant within a six month period exceeded $200, the offense is a Class 6 felony punishable by one to 5 years imprisonment in a state correctional institution, or in the discretion of the jury or court trying the case without a jury, confinement in jail for not more than 12 months and/or a fine of up to $2,500.  Otherwise the offense is a misdemeanour punishable by no more than 12 months in jail and/or a $2,500 fine. 

Variations on the credit card fraud offense include using an expired or revoked card or card number, false representation, obtaining cash advance, fraudulent application for credit card, criminal possession of credit card forgery devices, and unlawful use of payment card scanning devices and re-encoders.

Some of the points covered in these presentations are inclusive of, but not limited to, the following:

Bad Checks and Credit Card Abuse
Some of the things to look for range from basic information to more detailed inspection of the checks / credit cards / type of I.D. used, etc. 

  1. Does the check presented have a perforated edge on one or more sides? (Showing it has been taken from a standard personal checkbook or company check log). 
  2. What is the check # (is it low, indicating a "new account"?) Is it a high number, indicating an older established account? Note: just because it is a high number doesn't necessarily mean the account is "old" or "established" it is just a possible indicator. 
  3. Do the signatures match on the check and the I.D.? 
  4. Do the checks appear to be altered or have signs of erasure, mismatched type, etc.? 
  5. Is the numerical amount of the check and the written amount of the check the same? Correct date and signed? 
  6. Is the check written on a familiar bank? Local or out of town, etc. 
  7.  What is your policy on accepting checks for more than the amount of purchase? Does it need a review? 
  8. What is your policy on cashing payroll and/or two party checks? Does it need a review? These type checks can be trouble under certain circumstances. 
  9. Look for obvious signs of tampering on credit cards such as erasures to signature lines on the back, double or re-stamped characters on name and number embossments. 
  10. Many cards have holograms, are they the symbol that goes with that company's card? Have they been tampered with, added on, etc. 
  11. What is your policy on asking for photo I.D. along with the credit card (even if the card has a photo on it) to verify the person with the card is who they say they are. 
  12. Use common sense, do things "add up"? For instance, if the credit card is in the name of Dr. John Smith and the person presenting it is a 17 year old girl would you question the presentation of this card? Note that the 17 year old could very well be an authorized user / holder of this card and review your policy on this type situation. 
  13. Look at the magnetic stripe on the back of the card, here are a few reasons: has it been deliberately scratched, marred, or partially removed, or is it otherwise defective (possibly demagnetized)? There are many reasons for this to have happened, the strip is encoded with information and can be accidentally damaged (and innocently so) criminals on the other hand often do this in order to prevent normal "checking" of the information through electronic means. Thus forcing the "check" to be done by phone or the old fall back, the printed list of stolen / lost cards. If it is a recent stolen / lost card it may not be on the list yet. If the name or numbers on the card have been altered, the same may be true. Then there are the criminals that will present these cards during very busy times or to the obviously frustrated or new employee that will not take the time to go through various procedures to properly get "authorization". This method is used with processing checks properly.  

There are many types of shoplifters and just as many if not more reasons why they shoplift. The following is a sampling of information and discussion available.

Some shoplifters are categorized as "grazers", such as in grocery type stores, they go through, and like cattle, they graze - opening a package or box as they go, and eating, drinking, snacking, etc. - either replacing or discarding the leftovers or packaging without paying. Others shoplift for need, want, on a dare, or to supply their "vanities" (cosmetics, perfumes, etc.). Some shoplift as a profession. Most shoplifters generally have enough money on them to pay for what they are stealing. 

The manner in which shoplifters operate varies widely, and has been documented on in-store video and personal observation by "Loss-Prevention" personnel again and again. The thefts are carried out by individuals, pairs and by well organized "teams" of professional shoplifters. Often the boldness of some of these thieves shocks even well-seasoned police and loss-prevention specialists.

Make no mistake by thinking these are non-violent criminals. There have been numerous shoplifting incidents that have started on a small scale and escalated to robbery, causing injury, and in some incidents even death. Your business should review it's procedures on shoplifting, actions to take and/or not take, decisions of whether to apprehend, detain, etc. and insure that policies / guidelines are adhered to by employees.

What to Watch For

Some things to watch for ("Red Flags") that may indicate shoplifting is in process or about to occur are: 

The shifting of merchandise in the business. Most businesses have their more expensive merchandise in particular areas, watch for merchandise that has been picked up and moved to another area of the store or business. (If a team is working in tandem one will generally pick up, move and replace an item or items then leave and a second person will come in pick it up and leave).

Watch for distraction techniques. Loud noises, rude customers, demanding customers, spanking and screaming at kids, asking for an item behind the clerk (to get them to turn around) have all been used as distraction techniques to aid shoplifters. (If the cash drawer or locked cabinet is open, don't turn your back!) This list goes on and on and makes for a good discussion.

The following are just a few basic actions / procedures to aid in deterring theft / shoplifting. There are many, many more that are workable and effective. 

  1. Maintain active floor workers (sales and stock clerks). Greet everyone as they enter (now you have not only acknowledged their presence, but you may be able to supply a description). 
  2. Make a statement to customers like, "If you need help with anything just wave or look my way, I'll see you". 
  3. Re-stock shelves, don't leave gaps in merchandise and a full shelf makes it possible to tell at a glance if something is gone and on the same note, if you don't keep your merchandise out how can you sell it? This constant stocking, straightening, etc. also keeps you mingling with the customers, and if there is a thief, he/she is not alone and out of sight to steal. 
  4. Inventory regularly and as often as possible. 
  5. 9 Must-Know Ways to Spot a Fake Credit or Debit Card 
  6. With the rise of technology, counterfeit, cloned, altered and forged (CAF) cards are up a reported 12% over last year. This article provides you a quick law enforcement-level primer on how to detect a fake card beyond just matching ID and verifying the card with the processor. 


First, look at the numbers to ensure they are evenly spaced and aligned. A counterfeiter typically uses an aftermarket tipper/embossing machine that handles one number at a time. As such, numbers are often skewed.


Next, check to see if the account number matches the card name. Amex will start with a 3, Visa with a 4, MasterCard (MC) a 5 and Discover with a 6. You would be surprised how many thieves fail to do their basic homework.

Magnetic Strip 

Some thieves are lazy or cheap and fail to coordinate the magnetic strip data with the data on the front of the card. To get around this, bad guys will purposely damage the strip by scratching or demagnetizing it thereby forcing the merchant to manually enter the altered numbers on the front.

Receipt Match 

If you don’t have access to a magnetic strip decoding device to check the strip, one easy way to verify the strip and number is to run a transaction and see if the last four numbers printed on the receipt match.


Check the hologram sticker on the front of Visa and MC and the top back strip on an Amex card for the foil hologram. Forged cards often have a dull, 2D look.

Signature Strip 

The signature strip requires a different material when creating a card and is also often overlooked when forging. The strip should be on the back and white.

UV Logos 

If you are in a branch and have access to a ultraviolet or black light check the UV logo on most cards. “AM EX” will appear on front of an Amex card, “MC” on a MasterCard, a flying “V” in the lower left front and a dove logo in the middle of a Visa card and “Discover” will be written across a Discover card.


Most cards have a microprint verification number that can be seen with a magnify glass. This gets about 80% of all thieves and the microprint can usually be found under the account number or on back. While it varies with different cards, usually the microprint duplicates the first or last 4 numbers of the account number.


Finally, nothing verifies fraud like nervous behavior of the card holder. The most common tactic is for the thief to try to confuse or distract the clerk in order to take the attention off the CAF card.

 If any of the above doesn’t look right, contact law enforcement as chances are high you are dealing with identity theft and possibly counterfeiting. Credit and debit card fraud is fairly easy to detect because of the above, while prepaid cards usually have only about half of the above fraud prevention mechanics and so are harder. While this article won’t make you an expert, it will provide you an above average knowledge. 

Credit card fraud: the biggest card frauds in history

Credit card security has improved but card fraud is still on the rise – we take a look at two of the biggest credit card frauds ever and explain your rights.

With the introduction of chip and pin systems the ‘golden age’ of credit card fraud seems to be coming to an end, but sophisticated criminal gangs are still trying to scam millions from Credit Cards. The good news is that if you are scammed or a victim of card fraud you should be able to claim a refund from your bank or card provider.  

£17 million stolen – biggest UK credit card fraud 

 In the mid 2000s, a gang of international fraudsters managed to steal the details of over 32,000 credit cards. They used this information to create clone credit cards and scam at least £17million over a period of several years. 

 The gang members lived a life of luxury on the money: purchasing English mansions, Spanish villas, and a portfolio of other London properties; enjoying first class travel and five-star holidays; and spending a small fortune on designer clothes and shoes. 

 The scam was masterminded by Russian and eastern European criminals operating out of London with a sophisticated money laundering system, shifting money from the UK to Poland to Estonia, Russia, the United States and the Virgin Islands. 

Caught by chance 

It began to unravel when a gang member was caught, by chance, during a routine anti-terror check by a transport police officer who grew suspicious when they found forty mobile phone top-up cards. 

 This began an investigation which finally put to a stop to the scam in 2007. Five men were jailed with sentences up to five and half years. 

Card fraud in the UK 

Despite this story, credit card fraud has been steadily falling in the UK since the introduction of chip and pin technology and growing reach of cyber crime investigation teams with law enforcement agencies. 

 If you are a victim of credit card fraud, where you are scammed by a rogue trader or your card is showing transactions you are unaware of, you should be able to claim a refund as your card is protected Section 75 of the Consumer Credit Act and the Payment Services Regulations 2009: 

Both your credit card provider and the trader you made the purchase from are equally liable if something goes wrong.So if you were scammed with a fake purchase from fraudster you should be able to get a refund from your card provider. 

Payment Services Regulations 2009 – If any unauthorised transactions are made with your card your provider should offer you a refund.This applies whether your card has been cloned, or if any transactions were made after you reported it lost or stolen. 

For online shopping the majority of UK credit cards are protected by verified Visa and MasterCard Secure Code which adds an extra password (and layer of protection) to online purchases. 

The biggest credit card scam ever – $200 million 

America likes to do things big, and their credit card scams are no exception. The biggest card fraud to date was committed by a gang of eighteen criminals from New York, who managed to steal $200 million before being stopped. 

The story wouldn’t be out place in a Hollywood movie, with the fraudsters using their ill-gotten gains to live the high life: buying luxury cars; holidays; and millions of dollars worth of gold. 

A three-step scam 

This scam was more elaborate than the simple card cloning techniques used in the British and Australian frauds. 

Instead the American fraudsters created thousands of false identities with addresses across the US and in eight countries around the world. 

The card fraudsters created all the information and documents needed to make false profiles with America’s major credit agencies. Black market businesses were employed to provide fake credit histories for these false profiles.

With perfect credit scores for their fake identities they would apply for large loans and credit cards with high limits.

The money from these cards was spent in a network of sham companies and businesses in on the scam, which laundered the cash.Tens of millions of dollars were wired overseas to Pakistan, India, the United Arab Emirates, Canada, Romania, China and Japan.

The FBI shut the scam down in 2013 and 18 people were jailed on charges of defrauding both banks and the United States. The longest sentence handed down was 30 years.

 The end of US card fraud?

Banks in the United States are rolling out the same chip and pin security system we’ve had in Europe and the UK since 2004. As well as the benefits to US card holders, this should help cut the cases of stolen UK cards being used for fraud in the US.

Credit cards – more secure than ever

As well as being some great true crime stories there are two things to take from these frauds.

Even the most sophisticated scams unravel in the end. The authorities spend considerable time and effort to crack cases and collaborate with investigators worldwide to make sure fraudsters don’t escape.

Cardholders’ money is protected from scammers with regulations that ensure it’s the card provider and bank that foots the bill and is the ripped off party. This incentivises them to protect your credit card and money, as well as to pursue card scammers.

Finally while there are plenty of horror stories in the press of card frauds and people being scammed, the technology and security measures behind credit cards are becoming increasingly sophisticated making it harder for criminals to steal money.

Hacker shows how easy it is to steal credit card info 

  • A TOOWOOMBA computer whiz has shown how easy it is for hackers to steal your credit card information, using just a mobile phone.
  • Using near field communication, the same technology behind contactless tap and pay systems, the teenager can access your credit card information and transaction history.
  • He showed The Chronicle how a simple app can use archive files called APKs, which are readily available on the internet to hack bank accounts.

 "You simply scan the card and it gives all the information," he boasted.

 And he was true to his word, a scan did indeed reveal credit card information.

A transaction history stolen by a phone app. Photo Contributed


  • The mobile phone only needs to be within metres of the card.
  • There are a variety of techniques available to hackers, with the simplest version only needing the hacker to hold the card close to the phone.
  • The phone app accesses so-called hash codes - a series of numbers which can be transcoded to give usable information.
  • The information revealed includes the credit card number and expiration date along with transaction records.
  • The man was able to prove to The Chronicle that a Commonwealth Bank card could be hacked.
  • The method is commonly used overseas where people steal information, buy from the credit card and generate copies of credit cards for use.
  • In other countries ATMs are routinely modified to allow for criminals to "skim" the cards.
  • But this new technique raises the prospect that skimming machines could be replaced by a simple mobile phone.
  • The man involved in the demonstration requested to remain anonymous.

A screenshot revealing stolen card information. Photo Contributed

 Relay attack

One common NFC hacking technique is called the relay attack.

1. The attack forwards a request to the victim and relays back its answer in real time.

2. According to Infosec Institute, this attack technique focuses on the extension of the range between the NFC token, such as a card and the reader.

3. To implement it two NFC enabled devices are necessary.

4. Trojan software

5. Beware of Greeks bearing gifts is the old aphorism but in this case, beware of dodgy apps.

  Hackers can use Trojan relay software on Android phones to initiate payments.

Despite the fact that fraud only impacts a fraction of one percent of all purchases made with plastic, according to data from the Federal Reserve, it represents one of the biggest concerns among consumers.  This can largely be attributed to the catastrophic impact of the worst-case scenarios that run through people’s minds as well as the notion that regardless of how low the incidence of fraud may be, no one wants to be the exception to the rule and find their hard-earned money siphoned away by criminals.

What consumers generally do not know is that they are shielded from liability for unauthorized transactions made with their credit cards via the combination of federal law issuer/card network policy.  As a result, financial institutions and merchants assume responsibility for most of the money lost as a result of fraud.  For example, card issuers bore a 72% share of fraudulent losses in 2015 and merchants and ATM acquirers assumed the other 28% of liability, according to the Nilson Report, October 2016.

The following statistics will give you a better sense of the credit card and debit card fraud landscapes as well as how both have changed over the years.

  • Global Credit card and debit card fraud resulted in losses amounting to $21.84 billion during 2015. Card issuers and merchants incurred 72% and 28% of those losses, respectively, with the following transaction breakdown:
    • Card issuer losses occur mainly at the point of sale from counterfeit cards while merchant losses occur mainly on card-not- present (CNP) when customers buy online or pick up in a store

(Source:  Nilson Report, October 2016)

  • During 2015 credit card and debit card gross fraud losses accounted for roughly 6.9 per $100 in total volume, up from 5.7 per $100 in 2014.

(Source: Nilson Report, October 2016)

  • In 2015, US accounted for 38.7% of the worldwide payment card fraud losses but generated only 22.9% of total volume.

(Source:  Nilson Report, October 2016)

  • Retailers incur $580.5 million in debit card fraud losses and spend $6.47 billion annually on credit and debit card fraud prevention annually.
  • In 2011, 59% of the more than 37 billion debit card transactions that were made were verified by signature, 85% of all fraudulent debit card transactions involved signature “verification,” and $1.15 billion of the total $1.35 billion in debt card fraud losses (85%) stemmed from signature debit card transactions.

(Source:  PaymentsJournal, Feb. 2012)

  • Fraud against bank deposit accounts cost the industry $1.910 billion in losses in 2014. Debit card fraud accounted for 66 percent of 2014 losses.

(Source: ABA Deposit Account Fraud Survey, 2015)

  • In addition to the estimated fraud loss amount, banks’ prevention measures stopped another $11 billion in fraudulent transactions.

(Source:  ABA Deposit Account Fraud Survey, 2015)

  • In 2015 the U.S. switched to EMV, which resulted in reduced existing card fraud. It also his drove a 113 percent increase in incidence of new account fraud, which now accounts for 20 percent of all fraud losses.
  • Identity theft is a form of fraud that often results in unauthorized credit card and debit card transactions. In 2016, the number of identity fraud victims was at its peak in six years at 15.4 million, and the fraud losses resulting from identity theft amounted to 16 million a 6.7% increase from 2015.

(Source:  Javelin Strategy & Research, 2016 - 2017)

  • The majority of identity theft victims (86%) experienced the fraudulent use of existing account information, such as credit card or bank account information.

(Source:  Bureau of Justice Statistics )


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