New chip credit cards lead to …. worse fraud?

U.S. consumers have finally been liberated from archaic technology that used to protect them and their credit cards from identity theft. Millions of Americans now have chip-enabled credit cards. And now the results of this sweeping change are in. Just as many consumers were hit by ID theft last year – an estimated 13 million. And in fact, a more serious type of ID theft — new account fraud — actually doubled last year. It’s too soon to know why, the switch to chip cards is the likely culprit, say the folks at Javelin Strategy and Research, which just released its annual Identity Fraud study on Tuesday. It is so easy these days for our data to be stolen, especially with the rise of technology and the use of the internet. This is why you should never give anyone your details over the internet, as you just never know people’s intentions. With this being said, if in the past you have been someone who has been charged with a criminal offence like fraud, it’d be in your best interest to find a criminal lawyer here, as they could be the difference between you winning or losing your case. Plus, it is always good to have someone on your side. Hopefully, you’ll finally learn a lesson and realise that this is something not worth doing anymore. (This story first appeared on Credit.com. Read it there.) “Fraud is changing in a way that makes it more dangerous,” said Al Pascual, director of fraud and security at Javelin. “There is some troubling news, but some good news, too.” Chip credit and debit cards, also known as EMV cards, make creation of counterfeit credit cards nearly impossible for identity criminals. Fraud rings used to take stolen account data from big retailers like Target and print the account numbers onto fake credit cards for use by criminals. But that route is growing extinct as EMV use grows. So those criminals undertake other frauds, such as using stolen Social Security numbers to open up brand new credit cards in victims’ names. It might be a good idea to compare credit cards to ensure that you get a card with the most up to date security as well as the best interest rate. As well as solutions being put into place to help stop the issue of fraud, if you do suspect someone you know of committing insurance fraud, with the help of an insurance investigator, you’ll get to the bottom of this and help prevent anyone else from being a victim of fraud.

“With the much-anticipated U.S. shift to EMV well underway, fraudsters are transitioning along with consumers,” the Javelin report said. “This drove a 113% increase in incidents of new account fraud, which now accounts for 20% of all fraud losses.” New account fraud had declined for the past three years. The results aren’t a big surprise; plenty of experts predicted that EMV wouldn’t end fraud, but rather shift it to other forms. It also doesn’t mean the shift to EMV was a mistake; it does mean that, as criminals move to other forms of crime, bankers and retailers have to react. Avivah Litan, a fraud analyst at Gartner, thought it was too soon in the ongoing switch to EMV for such a dramatic impact on new account fraud levels. But clearly, fraud is changing, she said. “I definitely see a huge increase in identity hijacking for one reason or another,” Litan said. In the meantime, there are new headaches for consumers. Detecting new account fraud and recovering from it is much more complex than disputing fraudulent charges on an existing card. The Javelin report also found that victims of data breaches are now more likely to become victims of fraud than in the past. Last year, 1 out of 7 breach victims were hit by fraud; this year, the odds increased to 1 in 5. Pascual said he wasn’t surprised by that finding because database thefts in 2015 often involved Social Security numbers and other personal information — think of the Anthem health care database theft — rather than merely credit card information, as in the Target and Home Depot thefts. “We had been projecting this kind of change. But it was compounded by the fact that last year was a big year for theft of sensitive information. There were 64% more Social Security numbers exposed in 2015 than 2014,” he said. Not surprisingly, victims of Social Security number data theft were dramatically more likely to suffer new account fraud — 4% of Social Security number theft victims versus 0.6% of the general public, Javelin said. The news isn’t all bad. The overall amount of fraud continues to drop, from $23 billion in 2010 and $16 billion in 2014 to $15 billion last year. And the amount of existing card fraud dropped from $9 billion to $8 billion last year, the report said. But in another shift expected by the financial industry, so-called “card-not-present fraud” — fraud where a physical card need not be presented, like online or telephone shopping — overtook point-of-sale fraud, Javelin said. The banking industry isn’t sitting still. To combat increases in card-not-present fraud, merchants and banks are slowly turning toward digital token-based systems that would do for online transactions what chips do for in-person transactions. But that shift is slow, so the usual advice to consumers is even more imperative this year: Check credit card statements every month for fraudulent charges, and check credit reports at least once each year for signs of new account fraud. You can get your credit reports for free at AnnualCreditReport.com and you can get your credit scores for free every month on Credit.com. In the cat-and-mouse game played by thieves and the financial industry, things might get worse for consumers before they get better. “Criminals have to find a way to get paid,” Pascal said. The annual Javelin study of ID theft victims is in it 13^th consecutive year. The firm surveyed 5,111 U.S. consumers in 2015 and has surveyed 64,000 respondents since 2003. The study is independent, the firm said, but funded by LifeLock Inc. Don’t miss a post! My email list is free