American Express, Discover, MasterCard and Visa reported a 9.3% increase in credit card fraud losses from 2005 to 2006. Setting a new record, the issuers lost $1.24 billion to credit card fraud according to The Nilson Report. This number doesn&39;t include debit cards or fees passed on to merchants.

This major increase is somewhat surprising given that credit card fraud losses had actually been on a decline between 2001 and 2004. In 2001, fraud losses equaled roughly $1 billion a year. By 2004, this figure had dropped to $.8 billion. 2005, saw a huge 37% increase and 2006 continued that upward growth.

What is behind this spike in credit card fraud? There could be several factors at work. The increased use of credit cards has certainly contributed. Also the growth of credit card fraud that involves fast-moving international crime rings. Consumer awareness about fraud and enthusiasm for reporting it could have contributed as well.

Another significant factor is the credit card issuer&39;s general policy of accepting credit card fraud losses as a cost of doing business. Translated: They don&39;t care about fraud losses.

Consider that $1.24 billion in fraud losses only equals $0.06 for every $100 in transactions. And that the majority of fraudulent transactions are billed back to the merchant. Credit card fraud hasn&39;t become a large enough issue to impact the credit card issuers&39; bottom line. Consumers don&39;t mind it much either, since one simple phone call cancels the fraudulent charges.

When was the last time you got one of those phone calls from a creditor checking to see if a suspicious purchase is authentic? It appears that accepting fraud has become more popular than combating it among credit card issuers. Do you agree?