Mellody Hobson Gives Advice on Handling Identity Theft

We start off this week with some news about identity fraud. And it is not good news, is that right?

A recent study by Javelin Strategy & Research and identity-theft protection firm Lifelock found that more people were victims of identity fraud last year than at any point in over a decade. The study showed a dramatic 18% increase in identity fraud from 2015, involving some 15.4 million American consumers in 2016, and resulting in $16 billion in total losses. And much of this can be chalked up to credit card fraud, in spite of increased security measures that have been rolled out over the past few years, including credit cards with security chips.

Are the chip cards not working?

Actually, chip cards are working. Traditional retailers that have switched over to chip and pin cards have seen a dramatic reduction in cases of fraudulent purchases. Mastercard said counterfeit card fraud is down at its top 5 EMV-enabled merchants by more than 60 percent since October 2015.

And chip usage has helped bring down the amount of losses on existing card fraud to $961 on average per incident in 2016, down 2% from a year prior and down 30% from 2013. So the move to chip cards has worked for consumers, retailers and card companies where is has been implemented. However, 64% of storefront merchants still only accept cards’ magnetic stripe.

So why is identity fraud going up?

Despite the success of chip cards, the majority cases of identity fraud still involved credit cards. How can this be? Two words: online shopping. We are seeing a significant surge in “card not present” purchase fraud – that is, when purchases are made without swiping or inserting a physical card.

Obviously, those situations are most commonly encountered during online shopping. The study found a key contributor to the uptick in credit card fraud was a 15% rise in cases of fraudulent purchases online, where consumers try to purchase something on counterfeit or unsecure websites, and end up volunteering their personal information.

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Source: Black America Web | Mellody Hobson