Actimize, a leading provider of transactional risk management software for the financial services industry and a NICE Systems company, today announced the results of an independent Actimize peer-review survey examining mass compromise and ATM/debit card fraud. Of the financial services representatives polled in the Card Fraud and Mass Compromise study, 45 percent believe they have seen mass compromised data used in fraud attacks against their institutions.
Mass compromise impact
Mass compromise of client card information is negatively impacting the card industry on several levels: excessive card replacement, increased call center and operational costs and damage to customer confidence.
- Approximately 80 percent of respondents somewhat or strongly agreed that mass compromise events can decrease consumer confidence in the ATM/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 accounts actually to experience fraud, 15 percent reissued cards to over 20 percent of their cardholder population.
ATM/Debit card fraud on the rise
- Seventy percent of respondents saw an increase in fraud claims in 2008 as compared to 2007, of those with increased fraud claims, 58 percent experienced double digit growth.
- Over 80 percent expect ATM/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 to increase or dramatically increase once Canada adopts Chip and PIN (EMV), which is expected to reach critical mass by 2010. This is because 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 belief that more and more accounts will end up being exposed,” said Amir Orad, EVP and CMO at Actimize. “Based on this research, too many banks lack sophisticated risk management tools when dealing with mass compromises and end up excessively re-issuing cards – this is not a cost effective or long-term solution. These attacks have the potential for extremely high losses to the banking industry, and they will continue. Actimize believes it is vital that financial institutions prepare to counter these 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.
- “Real-time analysis and blocking has historically been very challenging, and either didn’t work or resulted in a high false positive rate due to technology limitations,” added Orad.
“It is certainly our own experience, and the belief of the research respondents, that today’s modern fraud solutions can be very efficient at real-time prevention and can provide a major performance lift.”
About the Study
The Actimize Card Fraud and Mass Compromise study was managed by Infosurv, and independent research company. Survey participants included 113 financial services representatives within the card and payments and banking industry. Respondents were primarily located in North America and Europe, with the remainder in Asia Pacific and Australia. To access the full report, go to www.actimize.com/cardfraudreport.
Mitigating transactional risk across enterprise silos, Actimize is a leading provider of software solutions for anti-money laundering, brokerage compliance and fraud prevention. Built on a patented, scalable and extensible analytics platform, Actimize solutions enable financial institutions to increase their insight into real-time customer behavior and improve risk and compliance performance. Actimize technology processes billions of transactions 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.