Independent Banker - June 2018 - 31

ing this pattern. At $480 million-asset Athens
Federal Community Bank in Athens, Tenn., the
migration to EMV chip cards has substantially
reduced card-present fraud at merchants who
have adopted EMV readers, according to Nicole
Gibbs, the bank's vice president and chief banking
officer. " However, we continue to see fraud
at automated fuel dispensers where reader
compliance is not yet required, and on fallback
transactions, " she says.
In Athens Federal's experience, online fraud
has increased, " but not significantly nor more
than expected at this point, " Gibbs adds. In her
estimation, more fraud occurs in CNP transactions
for a few reasons, " not solely due to the
EMV card transition, " she says. " First, online
fraud is increasing because online transaction
volumes continue to rise. When this volume
growth is coupled with the EMV card change
throughout the United States, card-not-present
fraud inherently increases. "
its core processor " to be aggressive in establishing
rules that trigger notifications and
blocks of suspicious card activity, " says Kenny
R. Charles, the bank's vice president for information
technology. " This approach has proven
effective from a bank standpoint. More importantly,
one layer of security generates customer
notifications when questionable or irregular
transactions occur, which has been a helpful
measure for customer peace of mind. "
The bank also employs functionality that
allows customers to turn their cards on and off
Florida Community Bank in Naples, Fla.,
started migrating its 30,000 cardholders to chip
cards four years ago and saw a subsequent drop
in in-person fraud. The chips have had no effect
on CNP transactions. Roxanne Mihm, vice
president and cross-sell manager, points out,
however, that card fraud has typically always
been more prevalent in CNP transactions, chip
or no chip.
Lynn Acheson, vice president of operations
for $214 million-asset Grand Rapids State Bank
in Grand Rapids, Minn., has had a similar experience.
She says that at her community bank,
point-of-sale fraud has decreased significantly
compared with the same time period a year ago.
" We have not seen an increase in card-not-present
fraud at our bank as of yet, " Acheson adds.
" However, recent publications we have read, as
well as training webinars we have attended, all
report an increase in CNP trends. I am sure it
will be just a matter of time before this type of
fraud escalates. "
How banks can manage CNP fraud
While community banks cannot prevent the
increase of fraud in CNP transactions, they
can help their merchant-business and consumer-cardholder
customers thwart these attacks.
Athens Federal Community Bank works with
" One layer of security
generates customer
notifications when
questionable or irregular
transactions occur,
which has been a helpful
measure for customer
peace of mind. "
-Kenny R. Charles, Athens Federal
Community Bank
Quick stat
3 in 4
Banks that
experienced
fraud losses
in 2016
easily and in real time, which creates an additional
deterrent to potential fraud, Charles adds.
Mihm says she is " just starting to see " online
merchants requesting and employing technologies
to mitigate CNP fraud in the past year,
including new forms of customer authentication.
" They're starting to ask, 'What can I do
to protect myself?' " she says. " It is very hard
to stay out in front of the fraudsters. And some
consumers view that extra layer of protection as
an inconvenience. "
Tim Sherwin, co-founder and CEO of consumer
authentication specialist CardinalCommerce,
says fraud is growing at a faster rate than digital
sales in the U.S.: 26 percent versus 20 percent.
" Issuers and merchants are declining legitimate
buyers when they think transactions are risky, "
independentbanker.org Q 29
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Independent Banker - June 2018

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