Newsroom

October 17, 2018

Fed study: Electronic payments fraud grew 37% in 3 years

electronic paymentA new report from the Federal Reserve revealed that between 2012 and 2015, the value of fraudulent electronic payments increased 37 percent, driven primarily by card fraud. During the same time period, the total value of electronic payments increased only 12 percent.

The data were collected as part of the Fed's surveys of depository institutions in 2012 and 2015, and payment card networks in 2015 and 2016. The study provides estimates of payments fraud totals and rates for payments processed over general-purpose credit and debit card networks.

Of note from the surveys:

  • card fraud, by value, accounted for more than three-fourths of noncash payments fraud in 2015 while in 2012, it accounted for less than two-thirds;

  • check fraud, by value, declined from $1.1 billion in 2012 to $710 million in 2015;

  • the value of fraudulent card payments and ATM withdrawals rose from $4 billion in 2012 to $6.5 billion in 2015; and

  • in-person card fraud decreased from $3.7 billion in 2015 to $2.9 billion in 2016 while remote card fraud grew from $3.4 billion to $4.6 billion.

The report also noted that fraud from using counterfeit cards declined from 2015 to 2016, likely as a result of the increased use of cards with microchips.

Earlier this month, the Federal Reserve released a proposal relating to settlements or other services to address the future needs of a real-time retail payments environment. NAFCU continues to be in constant communication with the Fed regarding its work to make the payments system faster and more secure.

The association met last week with Fed staff to discuss the strategy for achieving more secure payments; it also served on both the Fed's Faster Payments and Secure Payments Task Forces, which were formed as a part of the Fed's "Strategies for Improving the U.S. Payment System," since their inception in 2015. The conclusion of those task forces led to the development of the FedPayments Improvement Community, on which NAFCU serves.

NAFCU has also urged the Fed to stay away from a "one size fits all" approach to the payment system's future. It will continue to represent the credit union industry's best interests in this process.