Home / Credit News / Credit card fraud risk diminished by lenders' increased efforts

The chances of a consumer being hit with credit card fraud of any kind are significantly diminished these days thanks to notable efforts on the part of the lending and payment processing industries to increase protections.

As recently as 2009, instances of credit card fraud were on the upswing as thieves were successfully ripping off millions of consumers' accounts every year, but instances of this type of crime have been falling since 2010, according to a report from MarketWatch. The reason credit card fraud is now in decline is that the confluence of efforts on the part of merchants, card issuers and payment processors to increase automated vigilance for suspicious transactions have been largely successful.

Where before there were likely only a few things that could trigger a red flag for a fraudulent transaction, the number of potential warning signs has been increased significantly, the report said. Among the new criteria judged for purchases to determine their veracity is what's considered "abnormal spending." This can include everything from the type of products being purchased, the total value of the transaction and even where the purchase is being made. For instance, if a transaction is made for an item a consumer doesn't normally buy, for a significant amount more than is typically spent on their account, and in a city they don't regularly make purchases in, it would trigger all three red flags with a lender.

Often, the way lenders determine whether a purchase was made legitimately in the event that any of these warning signs are triggered is by quickly contacting the cardholder on the account used to make the purchase, the report said. These days, they can do so via phone, email or text message, and a prompt reply can help to ensure that a fraudulent purchase is spotted and potentially stopped relatively quickly.

But another way lenders are increasing account security, particularly when it comes to purchases made online, is by requiring consumers to enter more identifying information about themselves as a means of verifying they are the accountholder on the card, the report said. This can include asking for details like the cardholder's ZIP code or other information a fraudster may not have. Further, MasterCard recently introduced a new fraud system that provides companies with real-time data about the potential for fraud in online transactions.

"Fraudsters are becoming increasingly sophisticated in their approach, so online merchants must be even more vigilant in their efforts to protect the integrity of the online shopping experience for cardholders," Johan Gerber, group head of global network products for MasterCard Worldwide, told the news site.

Credit card fraud can, of course, still take place, and the federal government just shut down a number of websites that allowed crooks to buy and sell stolen credit card numbers in online marketplaces. For this reason, it's important that consumers stay vigilant in combing through their monthly statements to make sure their accounts have not been compromised.