From Federal Reserve Payment Study 2016:

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Questions for your students:

  • Based on Figure 4, does more fraud occur with in-person or remote card transactions?
  • How does the distribution of fraud vary between the U.S. and other countries? Which fraud types occur more frequently in the US? Which occur less frequently?
  • The U.S. recently implemented higher security “chip” cards which these other countries implemented years ago. What would you forecast this distribution of fraud data for the U.S. to look like in 2020?
  • You read an article that says the U.S. has more cases where a criminal fraudulently uses an account number than Australia. Is that possible based on this data?
  • How would you know if someone had created a counterfeit credit card that matched yours? What could you do about this?
  • Bonus: Roughly 80% of card transactions (debit and credit) occur in-person vs. remotely. Based on this fact and the data in Figure 4, do remote card payments have a higher or lower rate of fraud?

Definitions (from report):

Fraud types

  • Counterfeit card: Fraud is perpetrated using an altered or cloned card.
  • Lost or stolen card: Fraud is undertaken using a lost or stolen card.
  • Card issued but not received: A newly issued card sent to a cardholder is intercepted and used to commit fraud.
  • Fraudulent application: A new card is issued based on a fake identity or on someone else’s identity.
  • Other: “Other” fraud includes account takeover and other types of fraud not covered above.
  • Fraudulent use of account number: Fraud is perpetrated without using a physical card.

Fraud channels

  • In-person fraud: Fraudulent payments are made when the card user is physically present.
  • Remote fraud: Fraudulent payments are initiated when the card user is not physically present, typically online, by mail, or by telephone.

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Check out the new NGPF Lesson on Identity Theft which includes great activities to teach your students how to protect themselves.