The increase in credit card fraud alerts and the level of concern you should have about them.

• Deloitte reports that the number of credit card fraud alerts is increasing, causing inconvenience to consumers.
• The use of monitoring services, purchase limits, biometric security, advanced password protection, and credit freezes can reduce the rate of fraud alerts.
• Experian reports that 60% of credit card holders in 2023 experienced attempted fraud, despite the fact that fraud detection AI is improving quickly and reducing false alarms, according to Mastercard.

Because many of the alerts are not false alarms, it cannot be ignored.

Lalchand stated that fraud is rapidly increasing across all channels, including check fraud, credit card fraud, and peer-to-peer payments.

In 2022, global card losses due to fraud totaled $33 billion, with the U.S. market accounting for about 40% of the losses, according to Nilson Report. The research company predicts that card fraud could reach almost $400 billion by 2032.

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AI is assisting in identifying potentially problematic transactions, but many instances are turning out to be false alarms.

"Financial institutions are increasingly investing in fraud detection and modernization, replacing outdated technology and improving their fraud detection capabilities, resulting in a significant increase in detection on the fraud side."

More personal data is being stolen

Experian vice president Michael Bruemmer, head of the global data breach resolution and consumer protection division, states that fraud is being committed through various methods other than stealing credit card numbers, utilizing different aspects of financial and identity backgrounds, including social security numbers.

In the past five months, four major data breaches occurred, including Ticketmaster, Change Healthcare, AT&T, and National Public Data. Experian suggests that more data breaches may result in increased scrutiny and the implementation of preemptive alert protocols, although these are not always the primary reason for alerts.

AI has enhanced fraud detection by identifying patterns based on past behavior. Although credit card blocks may still occur for unusual purchases, technology has improved fraud alerts in other ways. MasterCard has observed a 20% increase in its ability to detect fraud and up to 300% increase in its ability to detect fraud without false alerts. However, MasterCard did not provide statistics on the absolute level of fraud and overall accuracy of fraud detection.

Mastercard acquired payment fraud company Recorded Future, a partner it already collaborates with to detect compromised cards.

Mastercard executive vice president and head of security solutions, Johan Gerber, stated, "We've made significant progress in reducing friction."

Instead of contacting the credit card company to verify travel plans and purchases in a foreign country, card companies now automatically track vacation and travel patterns based on past purchase behavior. Technology has also made it quicker to clear flagged fraud alerts if they are false alarms. In many cases, verification can be done in minutes through authorized related accounts or information only the individual cardholder would know.

Tips to cut down on unnecessary alerts

Some scenarios may raise concerns within current security parameters, according to Experian. While data breaches may increase fraud alerts, it is actually changes in shopping patterns that are most likely to set off red flags. If you buy something at a new store or purchase a big-ticket item that you don't usually buy, this is typically something that will be noted. Additionally, MasterCard notes that trying multiple transactions quickly in a row will always alert their systems, resulting in a temporary block.

"Gerber stated that it is a balance between being inconvenienced, potentially having a transaction go wrong due to MasterCard's mistake, or facing the loss of trust if a transaction was allowed that should have been declined."

To ensure accurate fraud alerts, you can sign up for monitoring services, set personal limit alerts on your accounts, and place monetary limits on notifications for big transactions. Additionally, freezing your credit file, using a password manager, and implementing two-factor authentication with a biometric passcode can also be beneficial.

"To ensure safe online shopping, Bruemmer advises using reputable websites, limiting credit card usage to specific shopping sites, and utilizing a low-level credit card. Additionally, he recommends using a tap-to-pay or mobile app and avoiding public Wi-Fi networks while shopping."

Even though you may receive alerts about data breaches frequently, it doesn't mean you won't eventually be affected.