Infographic: Payment Fraud, Then and Now

Remember the good, old days when people just bounced checks whenever they wanted to commit payment fraud? Fraud, of course, has become increasingly sophisticated, with each advance in payment security met by new schemes from fraudsters determined to find vulnerabilities.

To see how far we've come since those early days, our fraud team put together an interesting timeline of innovation in payment fraud prevention. The payment industry has certainly evolved since FICO® Falcon® Fraud Manager debuted in 1992. Back then, e-commerce and mobile banking didn’t exist. Even debit cards were little more than a faint blip on the payment radar screen, and nobody was talking about texting money to a babysitter.

Note: click on the infographic excerpt above to view it in full, or view it here.

It’s fascinating to see the ways fraudsters have tried to outsmart the payment ecosystem, and the steps we’ve implemented to stop them. In 1992, losses on US credit card transactions were equivalent to 18 basis points. As of 2012, such losses dropped to 5.2 basis points. As a percentage of US credit card transactions, losses have dropped by more than 70% since 1992.

That drop is undoubtedly due to many factors. Credit card issuers have incorporated numerous security features directly onto payment plastic. Consumers have become more protective of passwords and PINs. And my personal favorite among all the anti-fraud advances—a reliance on predictive analytics to target suspicious transactions at the point of sale.

At FICO, we feel that Falcon Fraud Manager has played a key role in the fight against payment fraud by monitoring over 9,000 payment transactions per second, including 2/3 of all credit card transactions worldwide.

As someone who makes his living trying to stop fraud, my passion is stronger then ever to keep up the fight!