Transcript Slide 1
Security & Safety – Middle East 2005
Credit Card Fraud
The Scale of the Problem
Michael Moore
Regional Security & Fraud Investigation Manager
14 – 17 Nov 2005
Agenda
The Credit Card System
Worldwide Trends
CEMEA/Gulf Fraud Performance
UAE Fraud Figures
Payment Associations do not:
• Issue Cards
• Acquire
merchants
Member Institutions
Issuing banks
Acquiring banks
Both
Basic Service Provided
Authorisation for card
transactions
Clearing and Settlement for
Member Banks
The Credit Card System
Merchant
Agreement
Cardholder
Agreement
Merchant
Acquirer
Cardholder
Issuer
Card Transaction Flow
Merchant
Agreement
Cardholder
Agreement
Sales Draft
Merchant
Cardholder
Authorizations
Acquirer
Issuer
Clearing & Settlement
Merchant
Agreement
Cardholder
Agreement
Merchant
Cardholder
Clearing &
Settlement
Acquirer
Issuer
Current Worldwide Fraud Trends
Losses during 2004 US$ 1.9 bn Visa Record
$200.00
$180.00
Fraud US$m
$160.00
$140.00
$120.00
$100.00
$80.00
$60.00
$40.00
$20.00
$0.00
1Q03
2Q03
LOST\STOLEN
3Q03
NRI
4Q03
FRD APPL
1Q04
2Q04
CNTRFEIT
3Q04
MISC
4Q04
CNP
Current World wide Fraud Trends
for MasterCard
An average of 8 cents for every $100
Worldwide Issuer Counterfeit Losses
Ending 4Q 2004
Fraud (Millions)
2004 losses US$630m (Up 17% over 2003)
$80
$70
$60
$50
$40
$30
$20
$10
$0
U.S.A.
2Q03
CANADA
3Q03
E.U.
4Q03
ASIAPAC
1Q04
2Q04
LAT.AM.
3Q04
C.E.M.E.A.
4Q04
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
CEMEA Acquired Fraud (RSV)
0.16
Fraud as a % of Volume
0.14
$6.49m
$6.96m
$9.1m
CEMEA
$6.75m
0.12
$6.50m
0.10
$7.23m $6.43m $8.05m
$8.3m
0.08
0.06
VISA WORLDWIDE
0.04
0.02
0.00
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
CEMEA Acquired Fraud by Type
6 Quarters ending 4Q04
Counterfeit now at US$5m
5,000
Total Fraud ('000)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Lost/Stolen
3Q03
NRI
4Q03
Fraud App
1Q04
Counterfeit
2Q04
Misc
3Q04
CNP
4Q04
CEMEA Acquired Fraud Distribution
2004
Acct Use $5m
Lost/Stolen $8m
Misc $0.5m
NRI $2m
Fraud Apps $0.4m
Counterfeit $15m
Percentage % in GCC
Lost/Stolen
18%
NRI
62%
Fraud Apps
31%
Counterfeit
21%
Miscellaneous
23%
Fraud Use
25%
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.
Easy to Fake
GCC – Impact of Counterfeit,
Lost/Stolen and NRI – 2004
CEMEA –
GCC
7%
$400k
EU - GCC
44%
$2.5m
USA - GCC
37% - $2.1m
Total Acquired in GCC - $6m
CEMEA Issuer Fraud to CSV
Fraud as a % of Volumee
0.12
VISA WORLDWIDE
0.10
$5.4m
0.08
$5.1m
0.06
0.04
$2.3m
$2.8m
$6.5m
CEMEA
$3.4m
$4.5m
0.02
0.00
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
CEMEA Issuer Fraud by Fraud Type
$4,500
Total Fraud US$k
$3,500
$2,500
$1,500
$500
-$500
Lost /
Stolen
2Q03
Card Not
Received
3Q03
Fraudulent
Applications
4Q03
Fraudulent Use of
Counterfeit Miscellaneous
Account
1Q04
2Q04
3Q04
4Q04
Skimming Device
CEMEA/GCC - Cash vs. ATM Fraud
3.5
$95k
GCC
Fraud Amount US$ms
3
2.5
2
$29k
$27k
$21k
1.5
$22k
$350k
1
$2k
$18k
0.5
0
2002
2003
Cash 6010
2004
ATM 6011
2005
ATM Skimmer
Fake ATM front side with Skimmer
UAE Acquired Fraud to 4Q 2004
$676
$700
Fraud
$600
$547
CEMEA
0.16
$711
$613
$553
0.14
0.12
$500
0.1
$400
0.08
$334
$300
0.06
UAE
$200
0.04
$100
0.02
$0
0
3Q03
4Q03
1Q04
2Q04
Quarter
3Q04
4Q04
Fraud to Sales %
$800
UAE Acquired Fraud by MCC - 2004
MCC
5944
5968
5732
4812
5411
5969
5309
7011
5499
5541
Description
Amount
JEWELRY STORES
$ 573,384
CONTINUITY/SUBSCRIPTION MERCHT$ 339,554
ELECTRONICS STORES
$ 266,254
TELECOMMUNICATION EQUIPMENT $ 195,632
GROCERY STORES/SUPERMARKETS $ 157,617
OTHER DIRECT MARKETERS
$ 90,320
DUTY FREE STORES
$ 66,049
HOTELS/MOTELS/RESORTS
$ 65,982
MISC FOOD STORES - DEFAULT
$ 56,826
SERVICE STATIONS
$ 54,588
TOP TEN
$ 1,866,206
ALL OTHER
$ 621,609
TOTAL
$ 2,487,815
Count Average % of Total
503 $ 1,140
23%
1,765
$ 192
14%
370
$ 720
11%
275
$ 711
7%
602
$ 262
7%
128
$ 706
5%
197
$ 335
3%
210
$ 314
3%
605
$ 94
2%
617
$ 88
2%
5,272
$ 518
77%
1,729
$ 149
23%
7,001
$ 386
100%
UAE – X Border Acquired Sales
2004
UK
25%
OTHER
32%
USA
10%
SWITZ
2% AUST
EGYPT
2%
KUWAIT GERMANY
3% FRANCE
4%
4%
4%
RUSSIA
5%
KSA
9%
X Border Acquired Sales vs.
Acquired Fraud 2004
Issuer Country
UNITED STATES OF AMERICA
UNITED KINGDOM
CANADA
FRANCE
AUSTRALIA
ISRAEL
SAUDI ARABIA
JAPAN
HONG KONG, CHINA
Fraud Amount Sales
$ 723,415
$ 629,331
$ 142,669
$ 126,234
$ 62,712
$ 57,004
$ 55,919
$ 53,817
$ 49,119
$128,409,498
$329,086,683
$24,711,425
$53,542,959
$29,815,969
$385,746
$116,097,186
$18,286,594
$7,846,557
Sales Rank Fraud Rate
2
1
13
7
9
73
3
18
31
0.56%
0.19%
0.58%
0.24%
0.21%
14.78%
0.05%
0.29%
0.63%
UAE Issuer Fraud to 4Q04
$600
0.12
$500
0.1
Fraud US$k
$400
0.08
$300
0.06
UAE
$200
0.04
$100
0.02
$0
0
3Q03
4Q03
1Q04
2Q04
Quarter
3Q04
4Q04
Fraud to Sales %
CEMEA
UAE Issuer Fraud by MCC 2004
MCC
Description
5311
5411
4812
5045
5611
5541
4722
5399
4011
5310
DEPARTMENT STORES
GROCERY STORES/SUPERMARKETS
TELECOMMUNICATION EQUIPMENT
COMPUTERS/PERIPHERALS/SOFTWARE
MEN/BOYS CLOTHING/ACC STORES
SERVICE STATIONS
TRAVEL AGENCIES
MISC GENERAL MERCHANDISE
RAILROADS
DISCOUNT STORES
TOP TEN
ALL OTHER
TOTAL
Amount
Count
Average % Total
$ 109,910
$ 93,513
$ 69,607
$ 37,769
$ 32,539
$ 29,495
$ 27,174
$ 19,304
$ 16,843
$ 15,912
258
368
134
24
20
352
34
32
107
35
$ 426
$ 254
$ 519
$ 1,574
$ 1,627
$ 84
$ 799
$ 603
$ 157
$ 455
$ 452,066
$ 1,193,730
$ 1,645,796
1,364
3,763
5,127
$ 518
$ 149
$ 386
50%
12%
9%
5%
3%
2%
2%
1%
1%
1%
86%
16%
100%
UAE – X Border Spend 4Q 2004
OTHER
29%
AUSTRALIA
3%
CANADA
3%
JORDAN
INDIA
3%
4%
UK
24%
USA
10%
GERMANY
BAHRAIN
5%
5%
LEBANON
7%
FRANCE
7%
UAE Issuer Fraud by Country of
Acquisition during 2004
Country
JAPAN
UNITED KINGDOM
UAE
AUSTRALIA
FRANCE
USA
ITALY
TURKEY
SPAIN
THAILAND
TOP TEN
ALL OTHER
TOTAL
Amount
$
$
$
$
$
$
$
Count
218,127
209,696
185,518
138,630
134,507
133,261
102,017
$ 93,569
$ 67,230
$ 28,611
604
562
915
336
286
546
123
178
256
67
$ 1,311,166
$ 334,630
$ 1,645,796
3,873
1,254
5,127
Average % of Total
$ 361
50%
$ 373
12%
$ 203
9%
$ 413
5%
$ 470
3%
$ 244
2%
$ 829
2%
$ 526
1%
$ 263
1%
$ 427
1%
$ 518
86%
$ 149
16%
$ 386
100%
No transaction monitoring from banks
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
Thank you
Together We Fight Fraud