Credit Card Transaction Fraud and Mitigation Trends

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Latest credit card fraud trends and mitigation methodologies

Despite the credit card industry’s effort to fight fraud, losses are increasing globally. The growing level of loss is driving an increase in the industry’s cost to fight fraud, resulting in a negative impact on profitability. According to a recent study, in 2010 U.S. financial services institutions suffered US$2 to US$8 billion in fraud losses associated with unauthorized transactions.

This paper discusses global credit card fraud with a special focus on the implications for financial services institutions, merchants, and consumers. To fight credit card fraud globally, financial firms are increasingly centralizing their fraud management systems to maximize the bottom line by lowering the volume of fraudulent transactions. They are also moving from in-house solutions to commercial enterprise fraud management products. Finally, in the area of web fraud detection, advanced end users are increasingly seeking self-learning predictive models—mathematical models based on artificial intelligence–that can run in parallel to the rule-based models.