Irish businesses selling to US warned of ‘deluge’ of online fraud

Irish businesses selling into the US should be wary of a “deluge” of card fraud that will be created next year, according to a leading expert.

The roll-out of chip and pin cards in the US is set to dramatically reduce retail fraud but increase the prevalence of the problem online, according to chief executive of fraud prevention company Trustev, Pat Phelan.

Online or phone transactions, or card-not-present purchases, are more susceptible to fraud given that the card cannot be examined, and previous examples have shown the risk increases once chip and pin technology is introduced.

“We expect card-not-present fraud to double in the US next year because what’s happened in Australia and Canada [is] the minute chip and pin comes in it practically eliminates retail fraud and that fraudster doesn’t get a job driving a taxi, he moves online and online fraud doubles so we expect a deluge this year of card not present fraud,” said Mr Phelan.

US retailers were supposed to be able to process chip and pin transactions by October 1 this year but reports suggest few retailers were compliant as of that date with credit card companies also missing the deadline by which every cardholder should have received an updated card.

Despite the slow progress in the US, the move towards more advanced technology is set to cause an explosion of online fraud where the risk lies with the seller.

“Card not present [fraud], especially, sits with the merchant, nobody else has any risk,” said Mr Phelan.

“That’s why Mastercard; Visa, the schemes, the processors, they don’t care because they have no financial loss. In a retail product sold online, the person who sold it bears 100% of the loss.”