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US banks want as little friction as possible on boarding versus European banks. Why would this be? Why are US banks less concerned about fraud versus Europe? On

US banks want as little friction as possible on boarding versus European banks. Why would this be? Why are US banks less concerned about fraud versus Europe? One possible explanation could be that fraud may be less prevalent in the US than in Europe.

orf 7y ago
Sure, that is indeed one explanation. However it would be an incorrect one by all accounts. The US just historically had a lot more smaller banks (more competition) and a lot less banking regulations than the EU. They don't have to look too hard at their customers, so they don't, and (I think, correctly) realize that they can simply write off the fraud with increased profits. And the best bit is that when they make a mistake they can just say: "sorry, your 'identity' has been stolen! Now you have to deal with it :)" rather than admit they allowed someone with a wig and a fake mustache to take out a loan in your name based on a set of completely, and obviously, fraudulent documents. At the consumer side, signing for a payment or using a cheque is completely ridiculous, and the USA is decades behind EMV rollout compared to the rest of the world (let alone contactless payments). By a few metrics the USA has the 3rd highest rate of card fraud, behind Mexico and Brazil, and the USA accounts for nearly 40% of the $21 billion worldwide total of card fraud. https://www.aciworldwide.com/-/media/files/collateral/trends/2016-global-consumer-card-fraud-where-card-fraud-is-coming-from.pdf https://www.aciworldwide.com/-/media/files/collateral/trends...
- tfha 7y ago
  It's always amazing to me that it's MY fault when the bank gave all of my money to someone else. The reason the US has such bad fraud rates is that the banks have little accountability and therefore no incentive to actually get the fraud rates down
- criddell 7y ago
  So the US fraud total is around $10 billion on purchases of how much? The latest number I could find was a projection for 2017 that said there's $3 trillion of credit card purchases. That works out to something like 0.3 percent which seems pretty low.
  - orf 7y ago
    For reference, according to the last ECB report in the EU the total value of fraudulent transactions from cards issued by SEPA countries was 0.041% of the total value of transactions (€1.8 billion - That's over 5x less fraud). Only 19% of that was point of sale fraud. The Fed publishes interesting breakdowns on US fraud types[1]. $3.6 billion card fraud in the US is point of sale - 10x more than the €342 million point of sale EU fraud. Overall there is $2.62 billion of counterfeit card fraud, $3.46 billion of "Fraudulent use of account number" (whatever that is), $810 million "lost or stolen card" fraud (not an issue with chip and pin), and $360 million "fraudulent application" fraud. So yeah. Not great numbers. 1. https://www.federalreserve.gov/publications/files/changes-in-us-payments-fraud-from-2012-to-2016-20181016.pdf https://www.federalreserve.gov/publications/files/changes-in...
    - criddell 7y ago
      That would probably mean having to get rid of things like tap-to-pay. IIRC, don't you have to enter a PIN in the EU? In the US I've never set the PIN on any of my cards and many places I don't even have to sign anymore.
      - orf 7y ago
        Contactless payments are pretty universal, depending on the country. Any newer card machines support them so it's just a matter of how old the card machine in the business is.

orf 7y ago

Sure, that is indeed one explanation. However it would be an incorrect one by all accounts. The US just historically had a lot more smaller banks (more competition) and a lot less banking regulations than the EU. They don't have to look too hard at their customers, so they don't, and (I think, correctly) realize that they can simply write off the fraud with increased profits. And the best bit is that when they make a mistake they can just say: "sorry, your 'identity' has been stolen! Now you have to deal with it :)" rather than admit they allowed someone with a wig and a fake mustache to take out a loan in your name based on a set of completely, and obviously, fraudulent documents. At the consumer side, signing for a payment or using a cheque is completely ridiculous, and the USA is decades behind EMV rollout compared to the rest of the world (let alone contactless payments). By a few metrics the USA has the 3rd highest rate of card fraud, behind Mexico and Brazil, and the USA accounts for nearly 40% of the $21 billion worldwide total of card fraud. https://www.aciworldwide.com/-/media/files/collateral/trends/2016-global-consumer-card-fraud-where-card-fraud-is-coming-from.pdf https://www.aciworldwide.com/-/media/files/collateral/trends...

tfha 7y ago
It's always amazing to me that it's MY fault when the bank gave all of my money to someone else. The reason the US has such bad fraud rates is that the banks have little accountability and therefore no incentive to actually get the fraud rates down
criddell 7y ago
So the US fraud total is around $10 billion on purchases of how much? The latest number I could find was a projection for 2017 that said there's $3 trillion of credit card purchases. That works out to something like 0.3 percent which seems pretty low.
- orf 7y ago
  For reference, according to the last ECB report in the EU the total value of fraudulent transactions from cards issued by SEPA countries was 0.041% of the total value of transactions (€1.8 billion - That's over 5x less fraud). Only 19% of that was point of sale fraud. The Fed publishes interesting breakdowns on US fraud types[1]. $3.6 billion card fraud in the US is point of sale - 10x more than the €342 million point of sale EU fraud. Overall there is $2.62 billion of counterfeit card fraud, $3.46 billion of "Fraudulent use of account number" (whatever that is), $810 million "lost or stolen card" fraud (not an issue with chip and pin), and $360 million "fraudulent application" fraud. So yeah. Not great numbers. 1. https://www.federalreserve.gov/publications/files/changes-in-us-payments-fraud-from-2012-to-2016-20181016.pdf https://www.federalreserve.gov/publications/files/changes-in...
  - criddell 7y ago
    That would probably mean having to get rid of things like tap-to-pay. IIRC, don't you have to enter a PIN in the EU? In the US I've never set the PIN on any of my cards and many places I don't even have to sign anymore.
    - orf 7y ago
      Contactless payments are pretty universal, depending on the country. Any newer card machines support them so it's just a matter of how old the card machine in the business is.