CUNA Mutual is trying to get credit unions to standardize the way they describe card fraud loss, adopting a standard which measures fraud losses as a percentage of card sales rather than as a static dollar amount.
|The card loss ratio adjusts automatically as the card portfolio grows and is used more and compares fraud losses to transaction dollars, Lovingood explained. The number also provides a good benchmark and enables peer comparisons, she added.
|She used as an example a debit card portfolio of 55,000 cards with $10 million/month in total sales. With an average interchange of 1.4% that portfolio yields a gross interchange income of $140,000 per month. But if the card portfolio has 30 fraud cases per month, and if the losses average $1,000 each, the portfolio will have card fraud losses of $30,000 or 30 basis points per month, well above the industry average ($30,000 in card losses/$140,000 in card income).
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