Changes in U.S. Payments Fraud 20122016 Talk About Payments Webinar - - PowerPoint PPT Presentation

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Changes in U.S. Payments Fraud 20122016 Talk About Payments Webinar - - PowerPoint PPT Presentation

Jan 19, 2024 168 likes •468 views

Changes in U.S. Payments Fraud 20122016 Talk About Payments Webinar November 1, 2018 Federal Reserve Payments Study Federal Reserve System CHANGES IN U.S. PAYMENTS FRAUD FROM 2012 TO 2016 Evidence from the Federal Reserve Payments Study

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November 1, 2018

Changes in U.S. Payments Fraud 2012‒2016

Talk About Payments Webinar

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Federal Reserve Payments Study

Federal Reserve System

Views expressed in this presentation are those of the presenters and do not necessarily reflect the views of the Federal Reserve Bank of Atlanta, the Federal Reserve System, or its staff.

CHANGES IN U.S. PAYMENTS FRAUD FROM 2012 TO 2016

Evidence from the Federal Reserve Payments Study

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Connection Information

  • Webinar link:

https://www.webcaster4.com/Webcast/Page/577/27683

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  • If you are having trouble hearing through your speakers

― Call-in number: 1-888-625-5230 ― Participant code: 8275 6884#

  • Ask a question:
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  • Email rapid@stls.frb.org
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Webinar presenters

Mary Kepler

Senior Vice President, Chief Risk & Compliance Officer Federal Reserve Bank of Atlanta

Geoffrey Gerdes

Principal Economist, Payment System Studies Board of Governors of the Federal Reserve System

Claire Greene

Payments Risk Expert, Retail Payments Risk Forum Federal Reserve Bank of Atlanta

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Today’s conversation

  • Data, environment & scope
  • 2012‒15 noncash payments fraud
  • Rates
  • Distribution by type
  • PIN use and fraud
  • 2015‒16 card fraud
  • Methods of fraud
  • Mix by debit and credit
  • Mix by location
  • Mix by chip and no-chip

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Just a taste: Key findings

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2012‒15 Rates of payments fraud, number & value, increase Card fraud by value increases

  • <2/10 of 1 percent of card payments
  • Increased from ≈ 2/3 to >3/4 of all

ACH fraud rates stable Check fraud, value & rate, declines 2015‒16 Rate of card fraud by value stable In-person counterfeit card fraud declines Remote card fraud increases Credit card fraud rates remained higher than debit rates

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FRAMEWORK

A framework for looking at noncash payments fraud

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Why study payments fraud?

  • Payments are vital to

U.S. economy

  • Measurement aids

understanding

  • Data informs efforts to

improve infrastructure

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Prevent Detect Mitigate

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Federal Reserve Payments Study

Noncash payment instruments Economic actors Respondents Cards

  • Credit
  • Non-prepaid debit
  • Prepaid debit

ACH

  • Originated
  • Received

Checks Wires

  • Government
  • Business
  • Consumer
  • Banks
  • Savings institutions
  • Credit unions
  • Card
  • Networks
  • Processors
  • Issuers

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Reports & Data: https://www.federalreserve.gov/paymentsystems/fr-payments-study.htm

Estimates of total number and value of all U.S. noncash payments

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Third-party payments fraud defined

Gross Fraud Cleared & Settled 3rd party Returned Depositing customer charged Courtesy write-off Recovered from 3rd party Not returned Accountholder charged Courtesy write-off Recovered from 3rd party Cleared, not settled

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Paying bank perspective

Source: Federal Reserve Payments Study.

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2012–2015 NONCASH PAYMENTS FRAUD

Depository institution survey

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Fraud increased by value & number

6.1 8.3 31.4 61.7 2012 2015 2012 2015 Value ($ Billions) Number (Millions)

Source: Federal Reserve Payments Study.

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Fraud rates increased 2012–15

0.38 0.46 2.60 4.38

2012 2015 2012 2015 Value Number

Payments fraud rates (basis points)

13 A basis point is 1/100 of 1 percent. Source: Federal Reserve Payments Study.

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Fraud a small fraction of payments value

  • 46¢ for every $10,000

in payments in 2015

  • <1/200 of 1% of all

noncash payments by value

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Fraud 0.0046% Not Fraud 99.9954%

Noncash payments, shares by value, 2015. Source: Federal Reserve Payments Study.

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Credit cards 46.7% Debit cards 26.6%

ATM, 4.3%

ACH 14.0%

Checks 8.6%

Fraudulent payments Shares by value, 2015

Most payments fraud is by card

15 Value share of payments fraud 0.0046%

Card >75%

  • Card fraud by value: 77.5%
  • Card fraud by number: 97.8%

Source: Federal Reserve Payments Study.

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Card fraud rates exceed ACH, check

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Rates of fraud 2015 (basis points). Note: A basis point is 1/100 of 1 percent. Source: Federal Reserve Payments Study.

10.80 0.08 0.25 6.07 0.33 0.32

Cards ACH Check Cards ACH Check Value Number

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Of cards, credit fraud rates highest, increased most rapidly

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Rates of fraud by value (basis points). Note: A basis point is 1/100 of 1 percent. Source: Federal Reserve Payments Study.

9.97 7.20 3.73 13.88 9.17 4.65

Credit cards Debit cards ATM withdrawals Credit cards Debit cards ATM withdrawals 2012 2015

Rate of payments fraud from credit card payments, debit card payments, and ATM withdrawals, by value, 2012 and 2015 (basis points)

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ACH rates low and (relatively) stable

18 0.05 0.13 0.05 0.14 0.59 0.89 0.12 0.48

ACH credit transfers ACH debit transfers ACH credit transfers ACH debit transfers 2012 2015

Value Number

Rates of fraud (basis points). Note: A basis point is 1/100 of 1 percent. Source: Federal Reserve Payments Study.

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CNP more prone to fraud

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17% 45% 30% 40%

Non-fraudulent Fraudulent Non-fraudulent Fraudulent Number Value

Card-not-present Card-present

Distribution of fraudulent and non-fraudulent card-present and card-not-present payments, 2015. Source: Federal Reserve Payments Study.

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PIN helps protect against fraud

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17% 39% 12% 33%

Fraudulent Non-fraudulent Fraudulent Non-fraudulent Value Number

PIN No PIN

Distribution of fraudulent and non-fraudulent card-present payments, 2015. Source: Federal Reserve Payments Study.

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2015–2016 CARD PAYMENTS FRAUD

Card network survey

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Card fraud methods realign, 2015‒16

  • By value
  • Counterfeit most

common in 2015

  • Account number fraud

most common in 2016

  • Counterfeit declined
  • Account number fraud

increased

3.46 2.62 0.81 0.60 Fraudulent use of account number Counterfeit card Lost or stolen card Other

Value of card fraud, 2016 (by industry category, $billions) 22

Source: Federal Reserve Payments Study.

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Underlying fraud channel mix alters

In-person fraud $ rate decreased

12.17 9.34 2015 2016

Remote fraud $ rate increased

15.45 18.71 2015 2016

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Rates of fraud (basis points). Note: A basis point is 1/100 of 1 percent. Source: Federal Reserve Payments Study.

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Sharp increase in chip use at POS

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2%

19%

3%

27% 2015 2016 2015 2016 Number Value

Chip No Chip

Source: Federal Reserve Payments Study.

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Remote card channel increasingly popular

  • verall—especially for payments fraud

11.1% 34.6% All remote Fraudulent remote 2015–16 percentage change in value, remote card payments

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Source: Federal Reserve Payments Study.

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DISCUSSION

Questions & comments

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Questions & Discussion

Ask a Question

  • Click the “Ask Question” button in the webinar tool
  • Email rapid@stls.frb.org

Reports & Data https://www.federalreserve.gov/paymentsystems/fr- payments-study.htm For more information Nancy.Donahue@atl.frb.org

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Resources

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  • Federal Reserve Payments Study
  • Survey of Consumer Payment Choice
  • Diary of Consumer Payment Choice
  • Survey of Consumer Finances
  • Survey of Household Economics and Decisionmaking
  • Survey of Consumer Expectations
  • Consumers & Mobile Financial Services
  • Blog: Take On Payments every Monday