The growth of the value of noncash payments fraud outpaced the overall growth of the value of noncash payments made during 2012-2015, according to the results of a Federal Reserve study released Tuesday.
The survey found that the value of noncash payments fraud rose 31% over the three-year period, from $6.1 billion in 2012 to $8.2 billion in 2015. The total value of noncash payments, by contrast, rose 12% during the same period (from $161.2 trillion to $180.3 trillion), the Fed said.
According to the Fed’s Changes in U.S. Payments Fraud from 2012 to 2016: Evidence from the Federal Reserve Payments Study, card fraud was the primary driver of the illicit payments during the period (that is, fraudulent payments made by an unauthorized third party).
That fraud rate apparently simmered down the year following the survey period. The Fed said that, according to the payment card networks, the rate of card fraud, by value, was nearly flat from 2015 to 2016, with the rate of in-person card fraud decreasing notably and the rate of remote card fraud increasing significantly.
Even so, the survey report states, both the Fed and the payment card networks surveys found that card payments fraud, at less than one-tenth of a percent of all card payments, is rare, and also represents a small fraction of the value of card payments.
Other findings of the depository institution survey showed:
- The 2015 payments fraud rate, by value, was more than 20 percent larger than in 2012, while the 2015 fraud rate, by number, was nearly 70 percent larger than in 2012.
- There was an estimated 46 cents of payments fraud for every $10,000 of payments in 2015, compared to 38 cents of payments fraud for every $10,000 of payments in 2012.
- The value of fraudulent card payments and automated teller machine (ATM) withdrawals rose from an estimated $4 billion in 2012 to $6.5 billion in 2015.
- Card fraud, by value, accounted for more than three-fourths of noncash payments fraud in 2015, rising from less than two-thirds in 2012.
- Check fraud, by value, declined to $710 million in 2015 from $1.1 billion in 2012.
- The value of ACH fraud rose to $1.2 billion in 2015 from $1 billion in 2012, but the fraud rate was little changed.
The Fed report provides estimates of payments fraud totals and rates for payments processed over general-purpose credit and debit card networks, including non-prepaid and prepaid debit card networks, the automated clearinghouse (ACH) transfer system, and the check clearing system, the Fed said. Those payment systems, according to the Fed, form the core of the noncash payment and settlement systems used to clear and settle everyday payments made by consumers and businesses in the United States.
Findings of the survey of card networks found:
- For every $10,000 of payments in 2015 and 2016, credit card fraud increased from $16.95 to $17.13, while debit card fraud decreased from $9.61 to $9.15.
- The combined fraud rate of credit and debit cards declined negligibly from $13.55 for every $10,000 of payments in 2015 to $13.45 in 2016.
- In-person card fraud decreased from $3.7 billion in 2015 to $2.9 billion in 2016 while remote card fraud grew from $3.4 billion to $4.6 billion.
- The total number of fraudulent card payments increased from 63.5 million in 2015 to 71.4 million in 2016. Fraudulent debit card payments increased from 4.3 for every 10,000 payments in 2015 to 4.6 in 2016, while fraudulent credit card payments were flat at 11.7 for every 10,000 payments in both 2015 and 2016.
- Fraud using counterfeit cards declined from $3 billion in 2015 to $2.6 billion in 2016, coinciding with a sharp increase in the use of cards with microchips for in-person payments from 2015 to 2016.
- Driven by the adoption of chip card technology, the share in the value of in-person payments using a chip instead of a magnetic strip increased from 3.2 percent in 2015 to 26.4 percent in 2016.
Federal Reserve Payments Study finds U.S. payments fraud a small but growing fraction of overall payments