Prepaid Card
Fraud and Risk Controls in the United States
New research from Mercator
Advisory Group examines fraud risk and best practice
for fraud prevention in
prepaid card programs
Boston, MA – November 14, 2013 The new research report
titled Prepaid
Card Fraud and Risk Controls in the United States examines
common ways in which criminals attempt to commit fraud, money laundering, and
other types of crime against prepaid programs and what the industry can do
about it.
The first section of the report uses recently reported example of
fraud and government statistics to reveal the size and shape of the prepaid
fraud problem. It also shows why crimes that involve prepaid cards are not due
to fundamental flaws with the product type itself. Rather, criminals attack
credit cards, debit cards, prepaid cards, and any other financial instrument in
which they see weaknesses.
The second section of the report examines the regulatory responses
to fraud. Every new instance of criminal activity brings calls for additional
regulation of the prepaid industry. The report shows where new regulations have
been written and explains why regulating prepaid is not always the best
response to crime.
The third section of the report examines best practices for
combating prepaid card fraud and other types. The report discusses preventive
measures that can be taken throughout the prepaid value chain to deter
criminals.
Additionally, the report contains suggestions for reading and
describes how several processors help manage fraud risks for issuers and
program managers.
"Prepaid fraud is a serious, but
manageable problem, as long as all the members of the prepaid value chain work
together. There is nothing inherent to prepaid that makes it more or less risky
than other financial products," comments Ben Jackson, senior analyst of Mercator Advisory Group's Prepaid Advisory Service,
and coauthor of the report.