April 28, 2009 09:08 ET

The Threat of First-Party Fraud and Cardholder Abuse in a Weak Economy

ROCKVILLE, MD--(Marketwire - April 28, 2009) - has announced the addition of TowerGroup's new report "The Enemy Within: The Threat of First-Party Fraud and Cardholder Abuse in a Weak Economy," to their collection of Banking & Financial Services market reports. For more information, visit

A consequence of economic recession is increased credit loss for card issuers when cardholders fail to make payments because of disruption to their employment, net worth, or cash flow. Credit issuers should be on the alert for customers who take advantage of the times and attempt to defraud the system. Card issuers are vulnerable when customers with changed financial circumstances use open credit lines and when cardholders commit first-party payment card fraud. Major North American issuers estimate that first-party fraud and credit abuse by cardholders cause between 5% and 35% of their total bad-debt write-off. TowerGroup projects that total card credit losses for issuers of US branded cards will peak at $55.6 billion in 2009 and that intentional cardholder losses from abuse and fraud may cost the industry as much as $10 billion. Issuers that defend against customer attacks through better application screening, ongoing behavior monitoring, and enterprise strategies position their organizations for lower losses now and faster recovery when the economy improves.

Topics covered in the report include...
Accounting for Fraud
Definitions of First-Party Fraud
How First-Payment Fraud Looks to a Collection System
How First-Party Fraud Can Infest a Portfolio
Technology Can Help, but Operational Skills Are Essential

For more information visit

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