Yesterday 4 Romanians were charged in a $1.8 million skim scam and another $500,000 was stolen from Staten Island ATM users (see today's posts) and now a new report from Actimize says that financial institutions expect ATM fraud to grow. No surprises there. Here's the Press Release announcing the Actimize Card Fraud Report: To get access to the full report you may click here.New reports says U.S. FIs expect debit, ATM fraud to grow in 2009
Half of financial institutions experienced fraud complaints as a result of major data breaches
Research Highlights Include:
• Responses from over 110 financial services representatives
•Only 35 percent use analytics to predict when to reissue cards;excessive card replacements due to lack of effective risk managementtools
• Seventy-four percent lack real-time ATM-Debit fraud prevention capabilities
NEW YORK - May 12, 2009 - Actimize, a leadingprovider of transactional risk management software for the financialservices industry and a NICE Systems company, today announced theresults of an independent Actimize peer-review survey examining masscompromise and ATM/debit card fraud. Of the financial servicesrepresentatives polled in the Card Fraud and Mass Compromise study, 45percent believe they have seen mass compromised data used in fraudattacks against their institutions.Mass compromise impact
Masscompromise of client card information is negatively impacting the cardindustry on several levels: excessive card replacement, increased callcenter and operational costs and damage to customer confidence.
•Approximately 80 percent of respondents somewhat or strongly agreedthat mass compromise events can decrease consumer confidence in theATM/debit card channel.
• Fifty-seven percent said mass compromise events increase overall costs for financial institutions.
• Twenty percent estimated an increase of at least 10 percent in call center traffic after a single mass compromise incident.
•While most respondents expect less than one percent of exposed accountsactually to experience fraud, 15 percent reissued cards to over 20percent of their cardholder population.
ATM/Debit card fraud on the rise
•Seventy percent of respondents saw an increase in fraud claims in 2008as compared to 2007, of those with increased fraud claims, 58 percentexperienced double digit growth.
• Over 80 percent expectATM/debit card fraud attempts to increase in 2009 as compared to 2008,with 35 percent predicting a 10 to 14 percent growth rate this year.
•Fifty-five percent of respondents expect US card fraud levels toincrease or dramatically increase once Canada adopts Chip and PIN(EMV), which is expected to reach critical mass by 2010. This isbecause fraudsters migrate to the path of least resistance.
• Forty-nine percent expect first party fraud to increase in 2009.
"Customer and card data are compromised daily and it is our beliefthat more and more accounts will end up being exposed," said Amir Orad,EVP and CMO at Actimize. "Based on this research, too many banks lacksophisticated risk management tools when dealing with mass compromisesand end up excessively re-issuing cards - this is not a cost effectiveor long-term solution. These attacks have the potential for extremelyhigh losses to the banking industry, and they will continue. Actimizebelieves it is vital that financial institutions prepare to counterthese threats properly."
Real-time prevention - a major gap and opportunity
When asked about the ability to analyze and stop fraudulent transactions in real time:
• Only 26 percent of respondents have that capability.
•Of those without, 38 percent of respondents believe they can save 20percent or more of current losses by implementing real-timetechnologies.
"Real-time analysis and blocking has historically been verychallenging, and either didn't work or resulted in a high falsepositive rate due to technology limitations," added Orad. "It iscertainly our own experience, and the belief of the researchrespondents, that today's modern fraud solutions can be very efficientat real-time prevention and can provide a major performance lift."
The Actimize Card Fraud and Mass Compromise study was managed byInfosurv, and independent research company. Survey participantsincluded 113 financial services representatives within the card andpayments and banking industry. Respondents were primarily located inNorth America and Europe, with the remainder in Asia Pacific andAustralia. To access the full report, go to www.actimize.com/cardfraudreport.
About Actimize
Mitigating transactional riskacross enterprise silos, Actimize is a leading provider of softwaresolutions for anti-money laundering, brokerage compliance and fraudprevention. Built on a patented, scalable and extensible analyticsplatform, Actimize solutions enable financial institutions to increasetheir insight into real-time customer behavior and improve risk andcompliance performance. Actimize technology processes billions oftransactions a day for many of the world's top banks and brokerages.Actimize, a NICE Systems company, has offices in New York, Israel,London and Tokyo. For more information, go to www.actimize.com.
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