A study just released by Javelin Strategy & Research has found that credit card issuers are dropping the ball when it comes to prevention and detection of fraud. The study also found that these companies are doing enough resolving fraud problems once they occur; but consumers would prefer if the companies were more proactive in preventing fraud before it occurs.
The study rated credit card companies on areas such as fraud prevention efforts, fraud detection and fraud resolution. The research company assigned a maximum amount of points the companies could earn for each area. For fraud prevention efforts, companies could earn up to 45 points. Fraud detection efforts could earn up to 35 points and fraud resolution efforts could earn as much as 20 points.
On average, credit card companies are not doing such a great job in preventing fraud. The average score for prevention methods was 24 points out of 45 points. Fraud detection rates were not too high either, with the average credit card company scoring 17 out of 35 points. What credit card companies do score high on is the reactive measures the companies take once credit card fraud is detected, scoring an average of 18 out of 20 points.
According to Philip Blank, who is the managing director of security, risk and fraud for Javelin, “A new wave of hacker attacks threatens the current security model, resulting in a call to action for issuers to take a strong look at the processes in place for detection and prevention of fraud?”
Fraud prevention is something credit card companies should be more proactive in preventing because $37 billion in credit card fraud money was lost in 2010. Identity theft, where new credit card accounts were created fraudulently totaled $17 billion.