Credit Card Fraud The Scale of the Problem

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Credit Card Fraud The Scale of the Problem
Security Safety Middle East 2005
Michael Moore Regional Security Fraud
Investigation Manager 14 17 Nov 2005
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Agenda

• The Credit Card System
• Worldwide Trends
• CEMEA/Gulf Fraud Performance
• UAE Fraud Figures

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Payment Associations do not

• Issue Cards

• Acquire merchants

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Member Institutions

• Issuing banks
• Acquiring banks
• Both

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Basic Service Provided

• Authorisation for card transactions
• Clearing and Settlement for Member Banks

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The Credit Card System
Merchant Agreement
Cardholder Agreement
Merchant
Cardholder
Issuer
Acquirer
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Card Transaction Flow
Merchant Agreement
Cardholder Agreement
Sales Draft
Merchant
Cardholder
Authorizations
Issuer
Acquirer
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Clearing Settlement
Merchant Agreement
Cardholder Agreement
Merchant
Cardholder
Clearing Settlement
Issuer
Acquirer
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Current Worldwide Fraud Trends
Losses during 2004 US 1.9 bn Visa Record
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Current World wide Fraud Trendsfor MasterCard
An average of 8 cents for every 100
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Worldwide Issuer Counterfeit Losses Ending 4Q
2004
2004 losses US630m (Up 17 over 2003)
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Financial loses as a result of POS Fraud
MasterCard

• Worldwide
• AED 3,385,206,786.44
• Middle East North Africa
• AED 66,755,408.64
• UAE
• AED 4,980,195.14

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CEMEA Acquired Fraud (RSV)
6.96m
6.49m
9.1m
CEMEA
6.75m
6.50m
6.43m
7.23m
8.3m
8.05m
VISA WORLDWIDE
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CEMEA Acquired Fraud by Type6 Quarters ending
4Q04
Counterfeit now at US5m
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CEMEA Acquired Fraud Distribution 2004
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Common Types of Credit Card Fraud - Never
Received 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 supported by forged
identity documents.
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Easy to Fake
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GCC Impact of Counterfeit, Lost/Stolen and NRI
2004
CEMEA GCC 7 400k
EU - GCC 44 2.5m
CANADA - GCC 5 - 304k
AP GCC 6 - 325k
USA - GCC 37 - 2.1m
Total Acquired in GCC - 6m
LATAM - GCC 1 - 34k
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CEMEA Issuer Fraud to CSV
VISA WORLDWIDE
5.4m
6.5m
5.1m
CEMEA
2.8m
2.3m
3.4m
4.5m
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CEMEA Issuer Fraud by Fraud Type
Fraudulent Use of Account
Fraudulent Applications
Card Not Received
Lost / Stolen
Miscellaneous
Counterfeit
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Skimming Device
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CEMEA/GCC - Cash vs. ATM Fraud
95k
GCC
29k
27k
21k
22k
350k
2k
18k
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ATM Skimmer
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Fake ATM front side with Skimmer
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UAE Acquired Fraud to 4Q 2004
CEMEA
UAE
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UAE Acquired Fraud by MCC - 2004
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UAE X Border Acquired Sales 2004
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X Border Acquired Sales vs. Acquired Fraud 2004
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UAE Issuer Fraud to 4Q04
CEMEA
UAE
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UAE Issuer Fraud by MCC 2004
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UAE X Border Spend 4Q 2004
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UAE Issuer Fraud by Country of Acquisition during
2004
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No transaction monitoring from banks
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Solutions 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

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Thank you
Together We Fight Fraud