True Costs of Fraud

Publication Date: November 2018

With the rollout of EMV in the United States, card issuers and merchants made significant investments to reduce their respective institutions potential fraud losses resulting from counterfeit magnetic stripe fraud.  As fraudsters modify their attacks and find new channels for fraud, all who participate in the payment ecosystem must remain adept and continue to adapt.  All stakeholders – customers, vendors, financial institutions, and everyone in between – are impacted in a variety of sometimes underappreciated ways.

The U.S. Payments Forum Card-Not-Present Fraud Working Committee developed this white to highlight the myriad forms these impacts take and the impact they have on the various stakeholders, providing insights from different perspectives.  The white paper presents three example case studies from different stakeholder perspectives to illustrate the cost of fraud.  The consumer, card issuer and merchant were selected to highlight as stakeholders because they experience the most pain points in mitigating fraud risk and most measurable losses when calculating the cost of fraud.

This paper does not include monetary values.  The focus of the white paper was to identify the types of cost and to present these in high-level, logical groupings.  This approach allows readers to understand the overall fraud scenarios and then apply specific conditions and values that are relevant for their own use.

Additional Supporting Materials about Fraud from the U.S. Payments Forum

Fraud trends and mitigation approaches are important topics for the U.S. Payments Forum.  The Card-Not-Present Fraud Working Committee has published several white papers and plans to continue development of materials to support the payments industry in the fight against CNP fraud.

Please note: The information and materials available on this web page (“Information”) is provided solely for convenience and does not constitute legal or technical advice. All representations or warranties, express or implied, are expressly disclaimed, including without limitation, implied warranties of merchantability or fitness for a particular purpose and all warranties regarding accuracy, completeness, adequacy, results, title and non-infringement. All Information is limited to the scenarios, stakeholders and other matters specified, and should be considered in light of applicable laws, regulations, industry rules and requirements, facts, circumstances and other relevant factors. None of the Information should be interpreted or construed to require or promote the establishment of any solution, practice, configuration, rule, requirement or specification inconsistent with applicable legal requirements, any of which requirements may change over time. The U.S. Payments Forum assumes no responsibility to support, maintain or update the Information, regardless of any such change. Use of or reliance on the Information is at the user’s sole risk, and users are strongly encouraged to consult with their respective payment networks, acquirers, processors, vendors and appropriately qualified technical and legal experts prior to all implementation decisions.


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