Card fraud comes in a variety of shapes and sizes, but recent data from two fintech companies that track it in real time revealed some statistical red flags that could prompt credit unions and other issuers to take a closer look at certain transactions.
1. It's 3 a.m. on a Tuesday. Using customer data from August 2014 to August 2015, the San Francisco-based analytics company Sift Science looked at a sample of 1.3 million transactions with U.S. shipping or billing addresses and found that criminals are more likely to commit online fraud during the workweek. It also found that 3 a.m. is the "fraudiest" time of day, regardless of time zone.
"The average nine-to-five worker usually does their shopping online on the weekends," it said in a study released this week. "For fraudsters, 'online shopping' with stolen credentials is their job."
2. They're in one of five specific cities. Urban locations are the most popular centers for fraud, but Canh Tran, CEO of the Chicago-based Rippleshot, said his company is also monitoring spikes in suspicious card activity in Tyler, Texas; Madison, Wis.; Durant, Okla.; Memphis, Tenn. and Jennings, La.
Tran said the usual big city suspects such as Miami, Atlanta, Dallas and Chicago always get the attention when it comes to card fraud.
"But when we look at our data, we see also a lot of smaller cities – mid-size cities – that don't get the attention they deserve," he told CU Times.
Tran said he believes 2% to 5% of all point-of-sale terminals within Tyler, Texas are compromised. The company also recently detected a 67% increase in suspicious activity in Kansas City over just a 10-day period, he added. Notably, the $378 million Mainstreet Federal Credit Union, which is based in nearby Lenexa, Kan., announced last week that a data breach compromised information belonging to about 300 members. President/CEO John Beverlin told CU Times hackers didn't break into the credit union's systems but likely purchased members' information somewhere online.
3. The user just opened the account. Accounts less than three days old are three times more likely to be fraudulent, according to Sift Science, and accounts that are two months old are twice as likely to be fraudulent than accounts that are at least six months old.
"One of the most common ways to identify fraud is by looking at how long a user has had an account," the study said. "Fraudsters tend to open accounts, commit their crime and then move on."
4. The transaction is small. Purchases of less than $20 are 2.16 times more likely to be fraudulent, according to Sift Science.
"What this suggests: Criminals are testing whether stolen credit card information is still valid by trying out low-value orders," the study said.
5. They involve people who say they're over 85. Sift Science found that users identifying as 85 to 90 years old had the highest fraud rate – 2.5 times more likely to be fraudsters than the average user. Fraudsters may be pretending to be elderly, the study said, suggesting possible identity theft or elder abuse.
6. The shipping or billing address is in Delaware, Florida, Nevada, Alaska or Arizona. These states had the highest online fraud rates, according to Sift Science.
"We found that states in which a high rate of robbery was reported also displayed a higher rate of online e-commerce fraud," the study said. "And both of these trends were correlated with a high unemployment rate."
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