Expect more online fraud as new credit cards arrive

The new chip credit cards that shoppers are getting in their mailboxes may prevent criminals from stealing from stores, but many thieves are expected to move their operations online. Small businesses could be the most vulnerable.

Online fraud in the U.S. is expected to nearly double to $19 billion by 2018 from $10 billion in 2014, according to Javelin Strategy & Research, a consulting company based in Pleasanton, California. In Britain, which began shifting to chip cards in 2001, online fraud rose 55 percent from 2005 to 2008, according to the UK Cards Association, an industry group.

“It’s inevitable it will happen,” says Steve Platt, an executive vice president at Experian, the credit reporting company.

Banks and other card issuers are sending consumers the new cards because the chips embedded in them are harder to counterfeit than magnetic stripes. Issuers began sending replacement cards in the last year because, as of Oct. 1, merchants are responsible for financial losses from fraud committed with chip cards if they don’t use new equipment to process chip card payments.

Small businesses are likely to be most vulnerable because many can’t afford the sophisticated software big retailers use to quickly determine whether transactions are fraudulent. Banks no longer have the liability in such cases. And there’s another wrinkle that could make operating difficult for businesses that experience a lot of online fraud: Companies that exceed a limit on fraudulent transactions — usually 1 percent of their total transactions — may be barred from accepting credit cards.

Source: http://cumberlink.com/news/state-and-regional/expect-more-online-fraud-as-new-credit-cards-arrive/article_efdb65c4-653e-5fe7-9a4f-1aef229010a4.html

. . . . . . . .

Print Friendly, PDF & Email

Leave a Reply