American philosopher George Santayana is credited with saying that those who don’t remember the past are condemned to repeat it. Today, FICO released an interactive fraud map showing how card fraud has changed over the last 5 years across Europe. While many of these trends have been previously observed, comparing the countries and noting cross-Europe trends gives a different perspective on what we’ve been through over the past few years. This gives us all a chance to remember the past and thereby avoid future repetition.
It’s been pretty widely reported that UK card fraud has dropped over the last decade, mainly thanks to EMV chip and PIN standards, and to use of advanced anti-fraud systems. What the map makes clear is that this fraud hasn’t disappeared — it’s simply migrated to other countries, typically those who were slower to adopt or leverage EMV standards, or those who neglected to keep up-to-date with their fraud defences. France and Germany are particularly pertinent examples of not forgetting one’s history.
Domestically France was the first country to adopt chip acceptance standards (not EMV, but an earlier version known as B0’) in the 1990s in order to provide a robust defence to card fraud. Unfortunately, the knowledge gained about the value of fraud defence investment did not carry through to the modern day. France’s slower adoption of EMV standards and the compromise of B0’ caused fraud to mutate and grow across the French market.
Similarly Germany, with a predominately debit rather than credit card portfolio, had not seen the sort of legacy card losses typically associated with credit cards, and therefore had not invested in the anti-fraud systems and technology that other EMV countries had embraced. Consequently, as EMV adoption began to make card fraud difficult to perform in other European markets, fraudsters migrated to the “weakest link.” This represented those without EMV, or those (like Germany) with otherwise more basic anti-fraud systems.
As the data supplied by Euromonitor shows, the UK’s piece of the fraud pie has shrunk dramatically since 2006, but France is up and Germany’s fraud has doubled, from €63 million in 2006 to €142 million in 2011.
I encourage you to play around with the map for both country-level data and cross-Europe insights, and to derive your own conclusions alongside what we’ve highlighted—provided thanks to thoughtful analysis by my colleague Martin Warwick.