How Is Credit Card Fraud in Latin America Different?

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Latin American consumers generally do not have the same peace of mind of non-liability for fraudulent transactions that customers in the United States enjoy, Lindsay Lehr writes below. // File Photo: Brandon R. Holgersen via Creative Commons License.

Despite new protections implemented by the credit-card industry, more U.S. consumers last year became identity-fraud victims than at any other time in more than a decade, according to a joint report by consulting firm Javelin Strategy & Research with identity-theft protection firm LifeLock. How big of a problem is identifying card fraud in Latin America and the Caribbean? Do companies and consumers in the region face the same risks and safeguards as in the United States? What types of credit-card related fraud have been most difficult to prevent in the region? Are new technologies, such as chip cards, catching on and cutting down on fraud?

Lindsay Lehr, senior director at Americas Market Intelligence: “Fraud is a critical concern in Latin America, especially in Mexico and Brazil, the region’s largest economies. These have among the highest fraud rates in the world, with 56 percent and 49 percent of consumers, respectively, having experienced credit card fraud in the past five years, compared with 47 percent in the United States, according to data published by Business Insider. The region does have to its advantage the near 100 percent penetration of EMV cards, which have been adopted at a steady pace for more than a decade. Chip cards, however, do nothing to protect against fraud in e-commerce transactions, and the fear of fraud—whether real or perceived—is a large deterrent to growth in the region. In Mexico, a market notorious for online fraud, chargebacks average 3 percent of all transactions, whereas in the United States they tend to be less than 1 percent. Perceived fraud and mistrust of banks is an equally challenging problem for e-commerce companies in the region. In Latin America, consumers do not have the same peace of mind of non-liability for fraudulent transactions that customers in the United States enjoy. Most U.S.-issued credit cards come automatically with…”

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