Groenfeldt just published an article in Forbes, "US Credit Card Fraud Is Spiking Ahead of EMV Secure Chip Introduction", describing how criminals are reacting to the looming US counterfeit card fraud liability shift date. Industry experts are expecting an increase in counterfeit activity as card issuers push forward with their EMV migration plans, and believe that the beginning of this spike can be seen even now.
The field for counterfeiting cards is certainly fertile right now, with millions of card details exposed in the Target data breach and subsequent retail data breaches revealed, even as recently as last Monday when Krebs announced a breach at Good Will Industries. Basic economics applies equally well to criminal markets as they do legitimate markets -- an oversupply of raw materials that will have a short shelf life has to lead to a lot of discounted transactions between the data breaches, the black market middleman websites, and the counterfeiters.
Lowered costs will encourage some new entrants to take up the fraudulent activity. At the same time, the major breaches are accelerating some payment card issuers' plans for providing EMV-compliant cards to their cardholders, and seasoned counterfeiters are increasing activity for the remaining months that they can extract economic value from it. So, card issuers have to balance their pleasure that delinquencies are at all-time lows with the expectation that they will have to suffer the hit from increase fraud for the few months remaining until the EMV liability shift date in October, 2015.
For some insight into how card issuers' EMV migrations will prevent point-of-sale counterfeit fraud, click the button below for Prime Factors' paper "How Card Issuers Can Reduce Impacts of Retail Chain Data Breaches". Look for a post next week regarding where criminals will look next, once counterfeiting cards no longer works.