Fallback fraud, an offshoot of the counterfeit fraud that EMV chip cards are meant to reduce, declined over the past year, according to new findings from Auriemma Consulting Group.
Fallback fraud refers to fraud resulting from would-be EMV payments resorting to the credit or debit card’s back-up magnetic stripe because of a problem with the chip. Such transactions typically occur when the fraudster damages the chip, covers it with clear film, or otherwise renders it inoperable, forcing the point-of-sale terminal to read the card’s mag stripe, which likely has been counterfeited. Incorrect insertion of an EMV card into a POS terminal occasionally initiates a fallback transaction, too.