Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation...
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![Page 1: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/1.jpg)
Credit Card Fraud Credit Card Fraud The Scale of the ProblemThe Scale of the Problem
Michael MooreRegional Security & Fraud Investigation Manager14 – 17 Nov 2005
Security & Safety – Middle East 2005Security & Safety – Middle East 2005
![Page 2: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/2.jpg)
AgendaAgenda
The Credit Card System Worldwide Trends CEMEA/Gulf Fraud Performance UAE Fraud Figures
![Page 3: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/3.jpg)
Payment Associations do not:Payment Associations do not:
• Issue Cards
•Acquire merchants
![Page 4: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/4.jpg)
Member InstitutionsMember Institutions
Issuing banks
Acquiring banks
Both
![Page 5: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/5.jpg)
Basic Service ProvidedBasic Service Provided
Authorisation for card transactions
Clearing and Settlement for Member Banks
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MerchantAgreement
Merchant Cardholder
CardholderAgreement
Acquirer Issuer
The Credit Card SystemThe Credit Card System
![Page 7: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/7.jpg)
MerchantAgreement
Merchant
Sales Draft
Cardholder
CardholderAgreement
Authorizations
Acquirer Issuer
Card Transaction FlowCard Transaction Flow
![Page 8: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/8.jpg)
MerchantAgreement
Merchant Cardholder
CardholderAgreement
AcquirerIssuer
Clearing & Settlement
Clearing & SettlementClearing & Settlement
![Page 9: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/9.jpg)
Current Worldwide Fraud TrendsCurrent Worldwide Fraud Trends
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
Fra
ud U
S$m
LOST\STOLEN NRI FRD APPL CNTRFEIT MISC CNP
Losses during 2004 US$ 1.9 bn Visa Record
![Page 10: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/10.jpg)
Current World wide Fraud TrendsCurrent World wide Fraud Trendsfor MasterCardfor MasterCard
An average of 8 cents for every $100
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Worldwide Issuer Counterfeit Losses Worldwide Issuer Counterfeit Losses Ending 4Q 2004Ending 4Q 2004
$0
$10$20
$30$40
$50
$60$70
$80
U.S.A. CANADA E.U. ASIAPAC LAT.AM. C.E.M.E.A.
Fra
ud (M
illions)
2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
2004 losses US$630m (Up 17% over 2003)
![Page 12: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/12.jpg)
Financial loses as a result of POS Fraud Financial loses as a result of POS Fraud MasterCardMasterCard
WorldwideAED 3,385,206,786.44
Middle East & North AfricaAED 66,755,408.64
UAEAED 4,980,195.14
![Page 13: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/13.jpg)
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CEMEA Acquired Fraud (RSV)CEMEA Acquired Fraud (RSV)
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
Fra
ud
as
a %
of
Vo
lum
e
CEMEACEMEA
VISA WORLDWIDEVISA WORLDWIDE
$6.96m
$6.50m$7.23m
$6.75m
$6.43m
$6.49m
$8.05m $8.3m
$9.1m
![Page 15: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/15.jpg)
CEMEA Acquired Fraud by TypeCEMEA Acquired Fraud by Type6 Quarters ending 4Q046 Quarters ending 4Q04
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Lost/Stolen NRI Fraud App Counterfeit Misc CNP
To
tal F
rau
d
('000)
3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
Counterfeit now at US$5m
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CEMEA Acquired Fraud Distribution CEMEA Acquired Fraud Distribution 20042004
Fraud Apps $0.4m
Misc $0.5m
Acct Use $5m
Lost/Stolen $8m
NRI $2m
Counterfeit $15mLost/StolenLost/Stolen 18%18%
NRINRI 62%62%
Fraud AppsFraud Apps 31%31%
CounterfeitCounterfeit 21%21%
MiscellaneousMiscellaneous 23%23%
Fraud UseFraud Use 25%25%
Percentage % in GCCPercentage % in GCC
![Page 17: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/17.jpg)
Common Types of Credit Card Fraud - Never Received Common Types of Credit Card Fraud - Never Received Issue (NRI)Issue (NRI)
Definition:
– Card is stolen from the mail system before the cardholder receives it and is subsequently used fraudulently
Use of NRI Cards is normally supportedby forged identity documents.
![Page 18: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/18.jpg)
Easy to FakeEasy to Fake
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GCC – Impact of Counterfeit, GCC – Impact of Counterfeit, Lost/Stolen and NRI – 2004Lost/Stolen and NRI – 2004
USA - GCC 37% - $2.1m
EU - GCC44%
$2.5mCANADA - GCC
5% - $304k AP – GCC6% - $325k
LATAM - GCC
1% - $34k
Total Acquired in GCC - $6m
CEMEA –GCC7%
$400k
![Page 20: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/20.jpg)
CEMEA Issuer Fraud to CSVCEMEA Issuer Fraud to CSV
0.00
0.02
0.04
0.06
0.08
0.10
0.12
2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
Fra
ud
as
a %
of
Vo
lum
ee
VISA WORLDWIDEVISA WORLDWIDE
CEMEACEMEA
$5.4m
$6.5m$5.1m
$4.5m
$3.4m$2.8m$2.3m
![Page 21: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/21.jpg)
CEMEA Issuer Fraud by Fraud TypeCEMEA Issuer Fraud by Fraud Type
-$500
$500
$1,500
$2,500
$3,500
$4,500
To
tal
Frau
d
US
$k
2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
Fraudulent Use of Account
Counterfeit MiscellaneousFraudulent Applications
Card NotReceived
Lost /Stolen
![Page 22: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/22.jpg)
Skimming DeviceSkimming Device
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CEMEA/GCC - Cash vs. ATM FraudCEMEA/GCC - Cash vs. ATM Fraud
0
0.5
1
1.5
2
2.5
3
3.5
2002 2003 2004 2005
Fra
ud
Am
ou
nt
US
$m
s
Cash 6010 ATM 6011
$27k
$18k
$21k$350k
$29k
$95k
$2k
$22k
GCCGCC
![Page 24: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/24.jpg)
ATM SkimmerATM Skimmer
![Page 25: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/25.jpg)
Fake ATM front side with SkimmerFake ATM front side with Skimmer
![Page 26: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/26.jpg)
UAE Acquired Fraud to 4Q 2004UAE Acquired Fraud to 4Q 2004
$711$676
$553
$334
$547$613
$0
$100
$200
$300
$400
$500
$600
$700
$800
3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
Quarter
Frau
d
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
Frau
d to
Sal
es %
CEMEACEMEA
UAEUAE
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UAE Acquired Fraud by MCC - 2004UAE Acquired Fraud by MCC - 2004MCC Description Amount Count Average% of Total5944 JEWELRY STORES $ 573,384 503 $ 1,140 23%5968 CONTINUITY/ SUBSCRIPTION MERCHT$ 339,554 1,765 $ 192 14%5732 ELECTRONICS STORES $ 266,254 370 $ 720 11%4812 TELECOMMUNICATION EQUIPMENT $ 195,632 275 $ 711 7%5411 GROCERY STORES/ SUPERMARKETS $ 157,617 602 $ 262 7%5969 OTHER DIRECT MARKETERS $ 90,320 128 $ 706 5%5309 DUTY FREE STORES $ 66,049 197 $ 335 3%7011 HOTELS/ MOTELS/ RESORTS $ 65,982 210 $ 314 3%5499 MISC FOOD STORES - DEFAULT $ 56,826 605 $ 94 2%5541 SERVICE STATIONS $ 54,588 617 $ 88 2%
TOP TEN $ 1,866,206 5,272 $ 518 77%ALL OTHER $ 621,609 1,729 $ 149 23%TOTAL $ 2,487,815 7,001 $ 386 100%
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UAE – X Border Acquired Sales UAE – X Border Acquired Sales 20042004
UK25%
SWITZ2%
RUSSIA5%
KSA9%
USA10%
GERMANY4%
OTHER32%
AUST2%
EGYPT3% FRANCE
4%
KUWAIT4%
![Page 29: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/29.jpg)
X Border Acquired Sales vs. X Border Acquired Sales vs. Acquired Fraud 2004Acquired Fraud 2004
Issuer Country Fraud Amount Sales Sales Rank Fraud Rate
UNITED STATES OF AMERICA $ 723,415 $128,409,498 2 0.56%UNITED KINGDOM $ 629,331 $329,086,683 1 0.19%CANADA $ 142,669 $24,711,425 13 0.58%FRANCE $ 126,234 $53,542,959 7 0.24%AUSTRALIA $ 62,712 $29,815,969 9 0.21%ISRAEL $ 57,004 $385,746 73 14.78%SAUDI ARABIA $ 55,919 $116,097,186 3 0.05%JAPAN $ 53,817 $18,286,594 18 0.29%HONG KONG, CHINA $ 49,119 $7,846,557 31 0.63%
![Page 30: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/30.jpg)
$0
$100
$200
$300
$400
$500
$600
3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
Quarter
Fra
ud
US
$k
0
0.02
0.04
0.06
0.08
0.1
0.12
Fra
ud
to
Sa
les
%
UAE Issuer Fraud to 4Q04UAE Issuer Fraud to 4Q04
CEMEACEMEA
UAEUAE
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UAE Issuer Fraud by MCC 2004UAE Issuer Fraud by MCC 2004MCC Description Amount Count Average % Total5311 DEPARTMENT STORES $ 109,910 258 $ 426 50%5411 GROCERY STORES/ SUPERMARKETS $ 93,513 368 $ 254 12%4812 TELECOMMUNICATION EQUIPMENT $ 69,607 134 $ 519 9%5045 COMPUTERS/ PERIPHERALS/ SOFTWARE $ 37,769 24 $ 1,574 5%5611 MEN/ BOYS CLOTHING/ ACC STORES $ 32,539 20 $ 1,627 3%5541 SERVICE STATIONS $ 29,495 352 $ 84 2%4722 TRAVEL AGENCIES $ 27,174 34 $ 799 2%5399 MISC GENERAL MERCHANDISE $ 19,304 32 $ 603 1%4011 RAILROADS $ 16,843 107 $ 157 1%5310 DISCOUNT STORES $ 15,912 35 $ 455 1%
TOP TEN $ 452,066 1,364 $ 518 86%ALL OTHER $ 1,193,730 3,763 $ 149 16%TOTAL $ 1,645,796 5,127 $ 386 100%
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UAE – X Border Spend 4Q 2004UAE – X Border Spend 4Q 2004
UK24%
USA10%
FRANCE7%LEBANON
7%
AUSTRALIA3%
GERMANY5%
OTHER29%
CANADA3%
JORDAN3%
INDIA4%
BAHRAIN5%
![Page 33: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/33.jpg)
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UAE Issuer Fraud by Country of UAE Issuer Fraud by Country of Acquisition during 2004Acquisition during 2004
Country Amount Count Average % of TotalJAPAN $ 218,127 604 $ 361 50%UNITED KINGDOM $ 209,696 562 $ 373 12%UAE $ 185,518 915 $ 203 9%AUSTRALIA $ 138,630 336 $ 413 5%FRANCE $ 134,507 286 $ 470 3%USA $ 133,261 546 $ 244 2%ITALY $ 102,017 123 $ 829 2%TURKEY $ 93,569 178 $ 526 1%SPAIN $ 67,230 256 $ 263 1%THAILAND $ 28,611 67 $ 427 1%TOP TEN $ 1,311,166 3,873 $ 518 86%ALL OTHER $ 334,630 1,254 $ 149 16%TOTAL $ 1,645,796 5,127 $ 386 100%
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No transaction monitoring from banksNo transaction monitoring from banks
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Solutions – Long TermSolutions – Long Term Migration to Chip Technology Terminals – point of acceptance changing in
UAE Cards – incentive plans introduced Chip Liability Shift – 2006 Verified by Visa & SecureCode looking to
secure internet transactions Initiatives to improve data security Mandating banks monitor transactions
![Page 37: Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East.](https://reader035.fdocuments.us/reader035/viewer/2022062515/56649ca35503460f94963e50/html5/thumbnails/37.jpg)
Thank youThank youTogether We Fight Fraud