The point of the EMV liability shift that went into effect toward the end of 2015 was to substantially reduce in-store credit card fraud. To that end, the liability shift has been a success. However, there are still many reports about rising incidences of payment fraud, and some seem to conflate in-store purchase statistics with overall fraud.
For instance, the 2016 holiday season saw a 79 percent increase in the risk of fraud, according to new research by Forter. However, most of that fraud increase came as a result of criminals being thwarted by EMV adoption nationwide, and instead of using stolen credit cards to make fraudulent purchases at brick-and-mortar stores, they instead largely opted to do so online. To that end, there was a 131 percent increase in account takeover for online fraud on an annual basis.
"The most notable growth in fraud attack rate is within the apparel industry," said Michael Reitblat, CEO of Forter. "Comparing the rate in Q4 2016 to that of Q4 2015 shows a significant increase of 69 percent. This may be related to the new fraudsters who've joined the online criminal community following EMV adoption in the US and are perhaps sticking to a vertical they understand. It may also reflect the increased comfort of genuine shoppers with the idea of buying fashion items online and returning as necessary."
What Does This Trend Reveal?
The data suggests that EMV is so effective at stamping out real-world fraud that criminals' only recourse is to make fraudulent payments online instead, according to Security Intelligence. Not only are EMV-capable cards more difficult to use when stolen, they're also nearly impossible to duplicate, which is not the case at all for traditional magnetic strip-based cards. And while there have certainly been hiccups with widespread EMV adoption, and these kinds of cards don't necessarily stop all forms of identity theft, that's hardly a reason for merchants to reject chip-and-PIN systems.
Instead, it's incumbent upon credit card issuers and online retailers to find ways to boost this type of security going forward, the report said. This is especially true as real-world fraudulent purchases keep declining thanks to rising EMV adoption rates among retailers of all sizes.
More Getting Onboard
The good news for the payments ecosystem as a whole is that as EMV becomes more ubiquitous, a large and growing number of merchants are incentivized to adopt. And recently, the major grocery chain Wegman's took that step, according to the Rochester Democrat and Chronicle. The company will pilot the new card readers in the Rochester area, and if things go as planned it will roll out to dozens of stores across the Northeast soon thereafter. Wegman's officials say they were swayed by the new and improved EMV processing capabilities that allow for faster checkouts.
While some merchants may be wary about the cost of adopting new point-of-sale devices, the fact is that EMV is something many consumers have already come to expect as their standard payment option. As such, being able to meet consumer demands in this regard may be vital to future success.