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 )
Largest Credit Card Data Breaches
| Company | Year | Number of Accounts Affected |
|---|---|---|
| CardSystems Solutions | 2005 | 40 million |
| TJX Companies, Inc. | 2006 | 94 million |
| U.S. Veterans Affairs | 2006 | 17.5 million |
| Certegy | 2007 | 8.5 million |
| Fidelity National Information Services | 2007 | 3.2 million |
| Heartland Payment Systems | 2008 | 134 million |
| Bank of New York Mellon | 2008 | 12.5 million |
| Hannaford Bros. Supermarket Chain | 2008 | 4.2 million (credit & debit) |
| Sony | 2011 | 12 million |
| Global Payments | 2012 | 1 million |
| Target | 2013 | 40 million(credit & debit) |
| Home Depot | 2014 | 56 million |
Online Fraud Losses by Year (U.S. and Canadian Merchants)
| Year | % Revenue Lost to Online Fraud | Revenue Lost to Online Fraud (in Billions) |
|---|---|---|
| 2001 | 3.2% | $1.7 |
| 2002 | 2.9% | $2.1 |
| 2003 | 1.7% | $1.9 |
| 2004 | 1.8% | $2.6 |
| 2005 | 1.6% | $2.8 |
| 2006 | 1.4% | $3.1 |
| 2007 | 1.4% | $3.7 |
| 2008 | 1.4% | $4.0 |
| 2009 | 1.2% | $3.3 |
| 2010 | 0.9% | $2.7 |
| 2011 | 1.0% | $3.4 |
| 2012 | 0.9% | $3.5 |
Revenue Lost to Online Fraud (in Billions)
Annual eCommerce Losses Due to Fraud (All Payment Types)
| Year | Amount (in Billions) |
|---|---|
| 2001 | $1.7 |
| 2002 | $2.1 |
| 2003 | $1.9 |
| 2004 | $2.6 |
| 2005 | $2.8 |
| 2006 | $3.1 |
| 2007 | $3.7 |
| 2008 | $4.0 |
| 2009 | $3.3 |
| 2010 | $2.7 |
| 2011 | $3.4 |
| 2012 | $3.5 |
Issuers’ Profit and Loss Analysis for Debit Card Transactions – Signature vs. PIN ($ Per $1,000 in transactions)
| Signature | PIN | Difference | |
|---|---|---|---|
| Revenues | $14.20 | $6.70 | $7.50 |
| Interchange Fees | $14.20 | $6.50 | $7.70 |
| Account Fees | N/A | $0.20 | N/A |
| Costs | $4.50 | $1.10 | $3.40 |
| Network Fees | $1.70 | $0.50 | $1.20 |
| Processing Fees | $0.80 | $0.20 | $0.60 |
| Rewards Programs | $1.20 | $0.00 | $1.20 |
| Fraud | $0.80 | $0.40 | $0.40 |
| Profit Margin to Issuing Banks | $9.70 | $5.60 | $4.10 |
Issuers’ Revenues for Debit Card Transactions
Issuers’ Costs for Debit Card Transactions
Cardholders Impacted by Fraud (by Country)
| Country | Cardholders Affected (Overall) | % Change 2014 - 2016 |
|---|---|---|
| Mexico | 56% | 23% |
| Brazil | 49% | 19% |
| USA | 47% | 6% |
| Australia | 40% | 9% |
| India | 37% | -4% |
| Singapore | 36% | 8% |
| Canada | 35% | 14% |
| South Africa | 33% | 3% |
| France | 29% | 3% |
| UK | 29% | 1% |
| Italy | 27% | 7% |
| Dubai | 27% | -17% |
| Spain | 26% | N/A |
| Indonesia | 26% | 4% |
| Thailand | 23% | N/A |
| New Zealand | 20% | 3% |
| Germany | 18% | 2% |
| Sweden | 14% | 4% |
| Netherlands | 14% | 1% |
| Hungary | 9% | N/A |
Annual Global Fraud Losses (Credit & Debit Cards)
| Year | Amount (in Billions) |
|---|---|
| 2000 | $2.7 |
| 2001 | $3.1 |
| 2002 | $3.1 |
| 2003 | $3.6 |
| 2004 | $4.2 |
| 2005 | $4.3 |
| 2006 | $4.8 |
| 2007 | $5.5 |
| 2008 | $6.4 |
| 2009 | $6.9 |
| 2010 | $7.6 |
| 2011 | $9.8 |
| 2012 | $11.2 |
| 2013 | $13.7 |
| 2014 | $16.3 |
| 2015 | $21.8 |
Annual Global Fraud Losses (in Billions)
Value of credit card frauds reported by US consumers to Consumer Sentinel Network(in millions)
Source: Consumer Sentinel Network, Annual Reports
Best and Worst States regarding Credit Card Frauds Complains reported by US Costumers per 100,000 Inhabitants
| States with Highest Credit Card Frauds Complains | Percentage | States with Lowest Credit Card Frauds Complains | Percentage | |
|---|---|---|---|---|
| District of Columbia | 61.29% | South Dakota | 7.57% | |
| Florida | 53.62% | Idaho | 10.51% | |
| California | 44.60% | West Virginia | 10.63% | |
| Maryland | 43.00% | Iowa | 10.72% | |
| Nevada | 43.00% | North Dakota | 11.10% |
More information about credit card fraud: