North American Credit and Debit Card Fraud on the Rise

Despite a slight decrease in corporate payments fraud and a heightened interest in security risks, 2013 saw an increase in fraud specific to credit and debit cards as criminals and their schemes became more sophisticated, according to the 2014 AFP Payments Fraud and Control Survey issued by the Association for Financial Professionals (AFP), the parent organisation of gtnews.

The annual survey, now in its 10th year is based on a survey by AFP in January 2014 of over 5,600 corporate practitioner members in the US and Canada with the job title cash manager, analyst, and director, resulting in 449 responses. Of these, 363 were from the US, 34 from Canada and the remaining 52 from outside North America

The survey, sponsored by JP Morgan, found that even as cheque fraud has declined in North America, companies are now preparing for the shift in credit/debit card liability from issuers to merchants. Among survey respondents, 22% that accept credit/debit cards from their custom¬ers anticipate a significant impact from their investment in card acceptance fraud prevention methods and half expect some impact.

In the wake of recent security breaches, which have hit major US retailers particularly hard, 63% of organisations have either ad¬opted additional security measures or plan to do so in the near future, with measures ranging from secure signature stamps, electronic signatures, payment data stored with third-party vendors and increased layers of security.

Among other key findings from the 2014 survey:

  • Sixty per cent of respondent organisations were exposed to actual or attempted payments fraud in 2013, similar to 61% in 2012 and down from 68% in 2011.
  • Changes in payments fraud experienced in 2013 compared to 2012 show 27% of respondents report an increase, 16% a decrease and the remaining 57% no change.
  • The payments formats targeted by fraudsters is headed by cheques (82%); corporate and consumer credit/debit cards (43% against 29% in 2012); automated clearing house (ACH) debits (22% from 27% in 2012); wire transfers (14% from 11%) and ACH credits (9% from 8%).
  • Seventy per cent of companies exposed to actual or attempted fraud in 2013 experienced no financial loss as a result.
  • Eighty per cent of companies that experienced actual or attempted payments fraud found it originated outside the organisation.

“Criminals will try to stay a step ahead,” said Jim Kaitz, AFP’s president and chief executive (CEO). “But with potential liability increasing for merchants, companies are taking a hard look at where their own vulnerabilities lie. This is especially important for big companies with complex systems, which are frequent targets for fraud.”

“The fraud survey serves as such an important tool in understanding the potential risks within the payments industry and should not be underestimated,” said Nancy McDonnell, JP Morgan commercial banking sales executive. “Knowledge of current payments fraud practices and preventive measures helps companies implement the products and processes they need to protect their corporate assets.”

The survey results can be downloaded at:


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