Credit Card Fraudsters Are Rushing For 1 Last Major Score

Criminals and credit card fraudsters are delighted that U.S. retailers and banks are taking their time in transitioning towards safer chip-based credit cards.

According to a report by Bloomberg, counterfeit-card fraud will surge 12.5 percent in 2016 and reach $4.5 billion as criminals are looking ramping up their activity before the safer chip-based cards become the norm.

Chip based cards are difficult, if not possible to duplicate compared to old-school credit cards that can be easily cloned.

"There's a fire sale, to try to burn through all of the stock of card data that they've seen," Julie Conroy, an analyst at Aite Group and a financial-industry researcher, told Bloomberg.

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Some of the "fire sales" are occurring at both small and large size retailers. Adding to the problem is the fact that many stores haven't taken the necessary steps to upgrade their machines to accept chip cards before the October 1 deadline when banks will stop footing the bill for fraud occurring at non-compliant locations.

Meanwhile, merchants that have already made the necessary upgrades in their equipment to accept chip based cards have already seen a reduction in fraudulent activity. In January, chip-enabled merchants saw a 26 percent year-over-year reduction in dollar volume of counterfeit fraud.

Almost 70 percent of all U.S. consumer credit cards are equipped with the more secure chip and 76 percent of the 200 largest merchants are already able to accept these cards. However, Chiro Aikat, a senior vice president at Mastercard Inc MA was quoted by Bloomberg as saying this is still the "early stages" of the upgrade.