FICO Data Shows the U.S. Credit Card Fraud Incident Rate Rose 17 Percent Over Two Years
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Analysis finds card-not-present fraud to be the fastest growing type of credit card fraud
SAN JOSE, Calif., Oct. 10, 2013 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today released insights from the FICO® Falcon® Fraud Manager Consortium data showing that the U.S. credit card fraud incident rate rose by 17 percent between January 2011 and September 2012, while the fraud dollar to non-fraud dollar ratio remained stable during the same period. The card-not-present (CNP) fraud incident rate grew by 25 percent during the time period, far outpacing the counterfeit fraud incident rate, which grew by 14 percent. CNP fraud, which refers to purchases made without physically presenting a credit or debit card, such as online purchases, accounted for almost half (47 percent) of all credit card fraud.
While the rate of card fraud attempts rose, the average loss per compromised account fell 10 percent during the time period, thanks in part to innovations in FICO Falcon Fraud Manager, which protects 85 percent of U.S. cards.
"CNP transactions are very convenient for consumers, but CNP fraud can be especially complicated to combat," said T.J. Horan, vice president of global fraud solutions at FICO. "We have been evaluating massive volumes of credit and debit card data for 20 years, looking for changes in consumer buying patterns, and we have invested in innovations that quickly identify CNP fraud, without delaying legitimate purchases and unnecessarily inconveniencing consumers."
In contrast to credit card fraud, the debit card fraud incident rate was unchanged, and average fraud losses per account dropped by 3 percent. Most debit card fraud occurs at ATMs, grocery stores and gas stations.
"While debit card fraud isn't increasing in the US, we're not seeing the same level of decreases as have been seen in the UK over the past few years," Horan continued. "But, as EMV standards get implemented in the U.S., we know that fraud will migrate as it has done in other regions of the world." FICO charted the changes due to so-called "chip and PIN" technology in its European Fraud Map.
Each year FICO studies active payment cards issued in the US and other global markets and uses this data to enhance developments of the analytic models for FICO® Falcon® Fraud Manager.
About FICO FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 80+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company's groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption - such as the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com.
Statement Concerning Forward-Looking Information Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company's Decision Management strategy and reengineering plan, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions, and other risks described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2012 and its last quarterly report on Form 10-Q for the period ended June 30, 2013. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.
FICO, Falcon and "Make every decision count" are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries.
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