It was clear shortly after the EMV liability shift that traditional credit card fraud was going to move to another channel: Card-not-present fraud became that vessel. The real question issuers care about today is how this fraud has evolved and what's next?
Both CNP fraud and CP fraud can take many forms. For example, we've been hearing a lot about how card-present fraud (and CNP fraud) is being perpetrated across digital wallet schemes. These fraudsters are targeting a merchant to acquire small amount of cards, and then acquired sufficient PII associated with those cards to attempt to simultaneously configure dozens of them for digital wallets. Many fraud schemes that used to be reserved for CP fraud are now evolving into new ways to perpetrate fraud without having the physical card on hand.
What we do know is that CNP fraud is on the rise and it's spreading to new avenues. As new technologies are developed, fraudsters find a way to breach those too. We've gathered the latest CNP fraud intel to help you understand the scope of this ever-evolving problem.
- CNP Fraud Is On The Rise — And Will Be For A While: Card-present fraud is declining, but CNP fraud is ballooning. Identity fraud and digital wallet fraud have helped boost these figures. It's estimated that CNP fraud will grow by 14% until 2023, according to Juniper Research.
- CNP Fraud is 81% more prevalent than POS fraud: CNP fraud is 81 percent more likely to occur than in-store, or card-present fraud. To put that into context, CNP fraud accounted for 66 percent of total fraud losses last year.
- Retailers stand to lose a ton over the next four years: Industry experts indicate that retailers will lose about $130 billion in revenue on fraudulent CNP transactions from now until 2023. The rise is attributed to a lack of keeping up with digital fraud detection prevention measures.
- CNP Fraud Is Growing At Far Greater Rates Than Other Fraud: A 2018 study by the Fed showed that CNP fraud jumped to $4.57 billion (up more than a $1.1 billion). This was during a time when CP fraud declined more than $700 million.
- CNP is Estimated to Be The Fastest Growing Type of Fraud: In general, all fraud related to payment cards is estimated to be $34.66 billion by 2022, according to Nilson. CNP is the leading type of card fraud and is expected to grow exponentially each year.