AFP payments fraud and control survey

Despite a slight decrease in corporate payments fraud and a heightened interest in security risks, 2013 saw an increase in fraud specific to credit and debit cards as criminals and their schemes became more sophisticated, according to the 2014 AFP Payments Fraud and Control Survey released by the Association for Financial Professionals (AFP).

“Criminals will try to stay a step ahead,” says Jim Kaitz, AFP’s president and CEO.  “But with potential liability increasing for merchants, companies are taking a hard look at where their own vulnerabilities lie.  This is especially important for big companies with complex systems, which are frequent targets for fraud.”

A pie chart showing Change in Prevalence of Payments Fraud in 2013 Compared to 2012

Change in Prevalence of Payments Fraud in 2013 Compared to 2012

Now in its 10th year, the survey, sponsored by J.P. Morgan, found that even as check fraud has declined, companies are now preparing for the shift in credit/debit card liability from issuers to merchants. Among survey respondents, 22% that accept credit/debit cards from their custom­ers anticipate a significant impact from their investment in card acceptance fraud prevention methods and half expect some impact.

In the wake of recent security breaches, 63% of organizations have either ad­opted additional security measures or are planning to do so in the near future, with measures ranging from secure signature stamps, electronic signatures, payment data stored with third-party vendors and increased layers of security.

A line chart showing Percent of Organizations subject of attempted or actual payments fraud copy

Percent of Organizations subject of attempted or actual payments fraud copy

Key findings:

  • 60% of organizations were exposed to actual or attempted payments fraud in 2013, similar to 61% in 2012, down from 68% in 2011.
  • Changes in payments fraud experienced in 2013 compared to 2012:
  • 27% – increase
  • 16% – decrease
  • 57% – no change.
    • Payments formats targeted by fraudsters:
      • 82% – Checks
      • 43% – Credit/debit cards (corporate and consumer), up from 29% in 2012
      • 22% – ACH debits, down from 27% in 2012
      • 14% – wire transfers, up from 11% in 2012
      • 9% – ACH credits, up from 8% in 2012
      • 70% of companies exposed to actual or attempted fraud in 2013 experienced no financial loss as a result.
      • 80% of companies that experienced actual or attempted payments fraud found it originated outside the organization.

“The fraud survey serves as such an important tool in understanding the potential risks within the payments industry and should not be underestimated,” comments Nancy McDonnell, J.P. Morgan Commercial Banking Sales Executive.  “Knowledge of current payments fraud practices and preventive measures helps companies implement the products and processes they need to protect their corporate assets.”

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