- The dollar volume of fraudulent credit and debit card charges soared 35% year-over-year in April, The Wall Street Journal reported Wednesday, citing data from Fidelity National Information Services.
- The surge in such charges arrives as consumer spending plummets, leaving card issuers and consumers at a rapidly growing risk of account fraud.
- The rise in such attempts arrives as millions of Americans failed to make card payments in April. A recent TransUnion report showed the share of accounts falling into “financial hardship” programs jumped 3.2%, or 14.7 million accounts, in April.
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Credit and debit card fraud attempts are skyrocketing as consumers weather the coronavirus pandemic and resulting recession.
The dollar volume of fraudulent transactions leaped 35% year-over-year in April, The Wall Street Journal reported Wednesday, citing data from Fidelity National Information Services. The sharp increase arrives as consumer spending has slumped to historic lows, signalling card issuers could face significant costs as a larger share of transactions turn fraudulent.
Fraud losses reached $US16.9 billion last year, according to The Journal, a 15% increase from 2018 and a worrying sign for cardholders, banks, and businesses. All parties stand to lose from such a jump, whether through undetected charges or reversed purchases.
Fraudsters are employing a range of strategies to steal credit card information. Some use random strings of card numbers until they find a real account to make fraudulent purchases, The Journal reported. Others use emails, texts, or phone calls to trick consumers into revealing their account information.
The rise in fraud attempts arrives as millions of Americans fall behind on credit card payments amid the worsening economic backdrop. The share of credit card accounts entering “financial hardship” programs surged by 3.2%, or 14.7 million accounts, in April, according to a recent report from credit-reporting agency TransUnion. The same measure jumped just 0.01% the previous month as virus lockdowns first kicked off.
Auto loans also slid into hardship status, with 3.5%, or nearly 3 million accounts, unable to cover monthly payments last month.
The trends stand to worsen as layoffs continue and consumers stockpile cash to ride out the worst recession in nearly a century. Jobless claims made last week totaled 2.1 million, the Labour Department announced Thursday, bringing the metric’s 10-week total past 40 million. A continued rise in credit card fraud could further hit Americans laid off during the pandemic and struggling to stay afloat through the downturn.