A recent blog post commented on the opportunity for the US to adopt chip and PIN technology to fight fraud. For a great endorsement of the benefits, you only need to look at today’s news release from FICO on fraud patterns seen in Europe.
By studying 55 million active European credit cards in the FICO® Falcon Fraud Manager Consortium, we can see that counterfeit fraud fell 60 percent between March 2009 and March 2011. And the remaining counterfeit fraud proceeds are now mainly being taken out in countries where chip technology has not been embraced. As my colleague Martin Warwick notes, this is largely due to chip and PIN adoption in major markets like the UK.
Fraud is like a balloon, unfortunately — reduce it one place and it pops up somewhere else. Fraudsters foiled in counterfeiting schemes have turned to card-not-present fraud. But by systematically tightening the net — using technology such as chip and PIN, as well as strong anti-fraud systems like FICO Falcon Fraud Manager — card issuers have seriously cut back on their vulnerability, slashed their losses, and given their customers greater protection.