Twice as many credit card fraud cases involve phone or online transactions than retail sales, according to new data from FICO. However, researchers found that sophisticated counterfeit rings have raised the stakes for merchants over the most recent twenty month survey period.
Researchers reported an increase in "skimming," a technique where criminals tamper with ATMs and payment devices to capture both card details and personal identification numbers. Thieves can use magnetic stripe blanks or other stolen cards as "clones," passing details of a stolen account to a payment device without the victim's knowledge. ATMs, grocery stores, and automated fuel pumps topped the list of places where criminals use stolen or cloned debit cards.
Thieves test stolen credit cards online before shopping in public
According to company spokesman Doug Clare, fraud rings usually test stolen cards with smaller online transactions. In a statement to reporters, Clare described online tests as a "relatively safe" way for thieves to learn whether victims notice extra purchases on their monthly statements.
The theory rings true with researchers at J.D. Power and Associates, where the results of an annual customer satisfaction survey show that nearly a quarter of reported credit card problems involve fraudulent transactions. That survey gave Discover top honors for resolving fraud investigations quickly.