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Survey: ATM/debit fraud on the rise

More than 80% of financial-services managers said they expect ATM/debit card fraud attempts to increase this year, a survey finds.

A recent survey by Actimize has some noteworthy findings, once you get past the parts that are geared to promote the vendor’s antifraud and risk management software.

Of the 113 financial-services managers polled (albeit, not a very big sample), 40% said they experienced double-digit ATM/debit fraud claims in 2008 compared to 2007. More than a whopping 80% said they expect ATM/debit card fraud attempts to increase this year, and almost 35% expect them to increase between 10% and 14%. Survey respondents represented retail banking, card issuers and payment processors.

More than 55% of the respondents predict U.S. card fraud to increase when Canada adopts chip and PIN, which Actimize said is expected to “reach critical mass” by 2010. Almost half said they expect fraud perpetrated by customers themselves — not outsiders — to increase this year.

Actimize’s survey also asked a lot of questions about the impact of mass compromises of payment card data, such as the Heartland breach.  Such breaches impact financial firms in three main areas, said Jasbir Anand, fraud product manager at Actimize: overall costs, call center volume and a decrease in customer confidence.

Forty-eight percent of those surveyed said less than 1% of compromised accounts actually experience fraud and almost 15% said of the cards they reissued after a mass breach, 20% were for accounts that were unaffected by actual fraud. The cost of reissuing a payment card can range from $3.50 to $30, Anand said, making the costs of reissuing cards out of proportion to actual fraud losses.

I know some credit unions, in the wake of the Heartland breach, acknowledged that reissuing cards was costly, but they also said it was the right thing to do for their customers. A spokesperson at Washington State Employees Credit Union, which had to reissue about 4,000 affected debit and credit cards, said it wasn’t acceptable to see if something happened to the cards before reissuing them.

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