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Some 4.8 million Americans experienced fraud on their existing credit card accounts last year, up 33.3% from 3.6 million in 2007, according to a new report by Javelin Strategy & Research. Last year, 2.1% of American adults experienced fraud on existing credit card accounts, up 49 basis points from 1.61% of adults in 2007. The incidence rate of fraud on existing debit and prepaid cards was 1.34% of adults experiencing that type of fraud last year, up only 2 basis points from 1.32%. Some 3.6 million Americans experienced fraud on debit and prepaid cards last year, up 16% from 3.1 million in 2007. "The incidence rate is up, but they're catching fraud faster," Mary Monahan, report author and Javelin managing partner, tells CardLine, referring both to card issuers with better fraud-detection tools and more-vigilant cardholders. The economic upheaval of 2008 helped to increase the number of fraud incidents committed by professional thieves, disgruntled insiders and desperate amateurs, Monahan theorizes. "If someone's being laid off, you might see more insider fraud because they don't feel good about their company," she says. "And when everything is in disarray (at a troubled financial institution or retailer, for instance), the organized criminals know that not a lot of attention is being paid to security." The average holding period between a credit card data compromise and the beginning of fraudulent use of the data was 100 days last year, up from 33 days in 2007, according to the report. The timing factor requires further study, but Monahan believes the longer hold time of card data may indicate professional card criminals are selling more card data to secondary buyers who then use the information to commit fraud. The average period between compromise and misuse of debit and prepaid card data remained at about one month, the same as in 2007. Consumers use debit cards more often than credit cards: 54% of consumers surveyed reported having used a debit card during the previous week, while only 45% said they used a network-branded credit card. That means consumers can detect fraud on their debit cards more quickly than on credit cards, Monahan says. The mean fraud amount on compromised credit card accounts was $5,389 last year, down 12.7% from $6,172 in 2007. The mean fraud amount on debit and prepaid cards was $3,697 last year, down 15.3% from $4,367.
