Why is the U.S. Such a Credit Card Fraud Hotspot?

The U.S. Leads the World in Credit Card Fraud. Why?

There’s a wide variety of different payment fraud tactics out there. Account takeover, friendly fraud, account spoofing…the list goes on.

However, the U.S. is a leader in fraudulent use of credit and debit cards. In fact, despite the fact that we represent just 5% of the world’s population, the U.S. produces 27% of all card fraud. Why is this the case? Well, there’s a few reasons.

Let’s examine five of the top reasons why the United States are such a hotspot for credit and debit card fraud.

#1. Wider Use

Here in the U.S., credit and debit cards caught on much earlier than they did in other parts of the world, and this widespread adoption still echoes today. Now, payment cards account for about 85% of all online transactions (PayPal represents most of the remaining total). And, with more cards in use, more cardholder information will fall into the wrong hands.

Compare that to Germany, for example, where the most popular digital payment method is electronic funds transfer. Or in China, where credit and debit is the largest share at 35%, but alternate payment options like Alipay, Tenpay, and UnionPay provide plenty of competition.

#2. Late to Adopt EMV Technology

EMV chip cards use tokenization technology. This means none of the cardholder’s actual information gets transferred; instead, the card creates a token that can be decoded once it arrives at the seller’s bank. This makes it harder to steal cardholder information and use it to create counterfeit cards.

EMV chip cards were standard throughout most of the world years before the US finally adopted them in 2015. Even now, many consumers and businesses are still transitioning to the new technology.

#3. More Opportunity to Use Information Online

EMV technology makes it harder to commit fraud in stores. However, fraudsters are resourceful, and instead of giving up, they’ve just switched tactics.

The US has one of the world’s largest eCommerce markets, and criminals take advantage of that fact to use stolen cardholder information online. Even despite businesses using advanced antifraud tools, criminals can still manage to pull-off attacks, costing billions of dollars annually.

#4. Chargeback Protections

Chargebacks were introduced as a way for consumers to claw-back their money in the event of card fraud. But ironic as it sounds, chargebacks are now more-often used as a tool to commit fraud, rather than recover from it.

“Friendly fraud” occurs when a cardholder requests a chargeback without proper justification. Sellers pay the upfront price here, losing revenue and merchandise, and paying added fees. In turn, this drives up costs, and increases prices for consumers.

#5. Growth in IoT Tools

U.S. consumers love connected devices. Whether they’re hub devices like Alexa or Google Home, connected security tools like Ring, or smart appliances, most of us have at least one or two around the house.

Unfortunately, more devices can represent more opportunities for fraudsters to break into a home network. Plus, with more devices out there, there is more data transferring back and forth every day. And, with more data, there’s more for fraudsters to steal.

Suspect Fraud at Play?

Don’t panic…that’s why we’re here.

Contact eConsumer Services today. We’ll investigate the charge on your behalf, and recover your funds. Click here and get started now.