Jeff Robbins | Senior Director, Business Strategy, Risk & Compliance, FIS
August 03, 2020
While the United States was on COVID-19 lockdown and turning to contactless payments due to personal distancing, fraudsters were working 24/7 to find nefarious ways to capitalize on the opportunity. Many of the fraudster targets included grocery stores, online music services, electronics, online shopping, restaurants and automated fuel dispensers. While many industry experts anticipated a slowdown in mobile P2P or tap-to-pay fraud due to COVID-19, the opposite has been true. In fact, there were nearly 7,500 more fraudulent authorizations from January to May 2020 versus the same period in 2019. Tap to pay and digital wallets have accelerated in popularity with consumers and it is critical for credit unions to offer members these contactless payment options.
Credit unions offering contactless payment options also need to balance the potential risk associated with them. Merchants that typically facilitate the acceptance of contactless payments become a target at the end of the day, and it should not come as a surprise that fraudsters know which merchants offer contactless payments and which ones do not.
The battle to beat fraud may seem never-ending. It was only a few years ago that card-present fraud was a major problem until EMV chip cards became commonplace in the United States, effectively stopping card-present fraud in its tracks. Vigilance is key, along with fraud rules and tools that will help you prevent or defend against payments fraud. Here are five prevention and defense best practices that you can deploy to make sure you and your members are protected.
Tap to pay and mobile wallets are tokenized and are considered a secure method for conducting transactions. Criminals are simply exploiting known configuration vulnerabilities to perpetrate fraud via this channel. The good news is, contactless fraud is a small piece of the overall fraud pie. It accounts for 2% or less on a quarterly basis of all attempted fraud, according to FIS data. It is proving to be very secure and inching closer to the performance of an EMV chip from a security standpoint. But it is critical that credit unions remain vigilante and have a multi-faceted plan in place to counter fraud attacks that includes validating their authorization and security settings for contactless payments.
To learn more listen to our recent webinar on Keeping Members Safe in a Frictionless World.