Visa Reports Decline in Fraud for 4th Straight Year

Visa U.S.A. said its credit card fraud rate has fallen for the fourth straight year.

Citing preliminary results, Visa said fraud losses fell to 0.08% of dollar volume-8 cents out of every $100-from 0.11% in 1996 and a high of 0.19% in 1993.

Visa will report final numbers in April, and expects them to be slightly higher, as more reports will have come in. But the association said transaction volume is growing faster than fraud.

"We are really elated about the drop," said Allan Trosclair, vice president of fraud control for the San Francisco-based association.

Fraud seems to be on the wane in most categories, he said. Fewer cards were stolen in the mail in 1997, and there were fewer cases of identity theft.

MasterCard International said it would not release fraud statistics until April. American Express Co. said it does not release fraud statistics at all.

Visa put out numbers early to tout its view that stricter security measures-now becoming common practice-are defeating credit card crooks.

For example, more banks are mailing newly issued cards that are inactive. The recipients must call their banks to verify receipt and their identities before the cards can be used.

Moreover, Visa established a neural network system in 1995 to spot suspicious patterns in transaction data.

Visa also offers an address verification service to raise the security level on mail- and telephone-order transactions, enabling merchants to match the address supplied by the customer to the one recorded by the card- issuing bank.

Also, banks now use an electronic system set up in 1993 to send reports of fraudulent transactions to the Postal Service through Visa, which bundles the information and sends it along daily. Banks used to file paper reports with the post office; that took longer, so it was harder to target hot zones for fraud.

The anti-fraud measures have incrementally added up to lower fraud losses.

"All of these types of things have been put on credit cards for the different kinds of crimes that occur at different stages in the process," said James L. Accomando, president, Accomando Consulting Inc., Fairfield, Conn.

Though fraud losses may be waning, vigilance will always be essential. "The day you rest on your laurels is when some very large, successful scam will take place," Mr. Accomando said. "You really have to stay there and monitor the very next technology in fraud."

Inside jobs remain among the biggest threats. "If you are actually able to steal" computer tapes, Mr. Accomando said, "forget the magnetic stripe."

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