A rise in risky consumer behavior is fueling climbing credit card fraud rates in the U.S., despite increasing efforts among banks to switch to more secure chip-enabled credit cards.
Some 46 percent of Americans have experienced credit card fraud in the past five years, according to Aite Group, which surveyed more than 6,000 cardholders worldwide this March. That's 9 percentage points higher than it was two years ago when Aite performed its last biannual survey.
Domestic debit card fraud rose more modestly, affecting 21 percent of those surveyed compared with 20 percent in 2014. Prepaid card fraud declined slightly, affecting 4 percent of those surveyed versus 5 percent in 2014.
Although the rise in domestic credit card fraud is modest in comparison to what's happening in some other countries, such as Mexico and Brazil, those countries have faced economic and technical problems that have contributed to their soaring fraud rates. Mexican banks are having trouble switching to more secure payment card technologies, according to ACI Global, a payment system company that sponsored the research. And Brazil's economic woes are fueling a rise in lawlessness.
However, in the U.S. at least part of the blame falls on the shoulders of increasingly careless consumers.
"Risky behaviors are rising dramatically," said Andreas Suma, vice president and global product leader for fraud data at ACI.
Among the five actions that can jeopardize your card security, the most prevalent is leaving a smartphone unlocked. In the latest survey, roughly one in five consumers admitted to doing that, compared with just over one in 10 in the previous survey.
In the past, Suma said consumers also regularly shredded privy documents, such as account statements that included their credit card numbers. Now, 18 percent of Americans say they just throw those statements in the trash, making them vulnerable to dumpster-diving crooks.
Despite frequent warnings about the unsecured nature of public Wi-Fi networks, another 14 percent of Americans say they've used online banking or done their online shopping while on a public computer, without taking the precaution of securing their software. Only 7 percent of Americans admitted to this sort of gaffe two years ago, according to the survey.
Smaller percentages of consumers pack pin numbers in their wallet along with the card and have fallen for phishing emails, at 9 percent and 8 percent, respectively, the survey found. However, even those rates are significantly elevated from two years ago, when just 6 percent of consumers carried a pin number in their wallet, and just 5 percent admitted to giving privy information to a phisher.
All five of those risky behaviors boost your chance of being victimized, Suma said. But not all victims are careless. Companies, governments and nonprofits have had security breaches that have left some 4 billion accounts exposed, which also contributes to the rise in fraud.
What can you do to secure your wallet in today's fraud-ridden environment?
Naturally, you should avoid the risky behaviors that unnecessarily jeopardize your data, Suma said. However, you'd be wise to take additional precautions such as limiting the number of cards that you carry around. It's fine to use one card and have one on hand as backup, but to walk around with a wallet full of plastic magnifies the number of times you could be victimized from one lost wallet.
This is particularly key when traveling, Suma said. In these cases, carry just one card and leave the other in the hotel safe.
Set up alerts with your credit card company that would trigger a message for unusual activity, he added. If, for instance, you use your cards only in person, set up an alert when the card is used online or without your signature. Your bank will then send you a text message before approving this type of transaction.
Use credit, rather than debit, to get the benefit of stronger fraud protections. While some consumers like the idea of debit cards to keep them from overspending, it's impossible to drain your bank account with a credit card.
Moreover, U.S. laws limit consumer credit card losses to no more than $50 -- an assurance you don't get with debit. Besides, credit cards are far more likely to offer consumers valuable rewards programs, such as cash back or airline miles, Suma noted.
Finally, monitor your credit. This doesn't necessarily require paying for a monitoring service, but it does mean you should always check your credit card statements and periodically get a free credit report from www.annualcreditreport.com.
And if you've been notified about a corporate breach that left your information vulnerable, ratchet up you level of diligence or put a fraud alert on your credit file, which would require lenders to contact you before approving a new loan.