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Why This Firm Knows That Online Fraud Will Double After October And That New York Gets Slammed

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Come this October the number of online fraud incidents will start to dramatically increase. Eventually, when all is said and done, it will have increased by 50% over the space of two years or so.

This is according to security firm Forter and its reasoning is thus: October is the month that the EMV payment standard goes into effect in the U.S. EMV, which actually stands for Europay, Mastercard and Visa, are also smart cards that store that data on integrated circuits rather than magnetic stripes. They are designed to reduce credit card payment fraud and come with a neat trick engineered by the card companies to ensure compliance: namely, retailers that do not upgrade to credit card equipment that can read these chip-enabled credit cards will be liable for the breaches.

Now, there is a lot of confusion and, surprisingly, ignorance of the coming rules among retailers but that is not particularly relevant to Forter as its zeros in on October a pivotal month.

Enough merchants will make the shift, safeguarding, at least to a greater extent than currently exists, the point-of-sale.

As a result cyber thieves will double down on online fraud instead, William Zielke, chief marketing officer for security firm Forter, tells me. "The truth is, fraudsters take the path of least resistance. If the point-of-sale at physical retailers is hardened they won't go there if there are easier targets."

Like the countless hotspots in New York City.

Indeed if there is one theme running through Forter's analysis it is the unobtrusive yet -- at least in retrospect -- forehead-slapping reasons why fraud occurs where it does.

So back to New York City.

Walk around any given block in New York City and you'll notice that you can't go more than a block or two without passing a Starbucks or a McDonalds and their free Wi-Fi offerings. It's an amenity that most city dwellers take for granted and use abundantly.

Cyber thieves know this and position themselves accordingly.

That is why Forter believes that New York is the top state for mobile fraud, according to an analysis it performed for Forbes.com. "A highly-populated state like New York is going to have a lot of public Wi-Fi," Zielke says. Forter says of the online fraud in New York  39.3% of it is mobile fraud.*

Ditto the next states on its list: Maryland, at 27.7%, Washington DC, at 23.5%, California's 22% and Connecticut's 21.5%.

It is logical, then, that when the EMV goes into affect, mobile fraud will increase the most in these states for all of the aforementioned reasons. Zielke says the firm has not come up with a percentage increase specifically for mobile fraud, although it falls under the general umbrella of online activity.

Cyber Thieves Are Surprisingly Device Agnostic

Furthermore, it won't matter if you use Apple's iOS or Google's Android operating system, even though market share in the US is still fairly lopsided, favoring Android.

I know, I know. There are more Androids, at least in the U.S., according to IDC figures

It would seem that Zielke's rule of cyber thieves taking the path of least resistance would mean the cyber thieves double down on Android but no.

There are a number of reasons why mobile fraud is device agnostic, Michael Reitblat, co-founder and CEO of Forter, explained to me. There is more legitimate business conducted on iPhones, he says, or rather, the more easily disposable Android devices are the choice of criminals.

Also, Apple users tend to buy more than one iPhone, he says, which further levels the playing field.

And if there is one thing cyber thieves don't want to bother with is an uphill slog.

*Note: An earlier version of this story stated that 39% of all mobile fraud occurs in New York. It has been corrected to state 39% of all online fraud in New York is mobile. 

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