Payment fraud losses are a problem for 75 percent of financial institutions, according to a new study from the Minneapolis Federal Reserve Bank (Fed).
The survey of some 300 financial institutions found that payments fraud losses on debit and credit cards are most common, with 96 percent of debit card issuers and 77 percent of credit card issuers reporting them in 2016.
Further, 80 percent of financial institutions are using chip cards for authentication. Chip card technology is effective in preventing counterfeit fraud for in-person transactions.
The Minneapolis Fed study also found that customer diligence is critical in stopping fraud. This means reviewing transaction activity and statements online and reporting suspicious activity to their financial in situations. The report included other measures to reduce or prevent fraud.
“This report provides great insights into what FIs (financial institutions) are doing and find effective to mitigate payments fraud. FIs could use the information to benchmark their own fraud mitigation methods against those identified as effective in the survey,” Guy Berg, vice president of the Payments, Standards, and Outreach Group at the Minneapolis Fed, said.
The Minneapolis Fed report grouped risk mitigation methods for each payment type into three different categories — transaction screening and scoring, authentication methods, and other reporting and risk management methods.