Noncash payments fraud in the U.S. outpaced growth in noncash payments overall between 2012 and 2015, according to a Federal Reserve Payments Study released this week.

The study’s survey of depository institutions found noncash payments fraud increased 37%, from $6.1 billion in 2012 to $8.3 billion, in 2015. Meanwhile, over the same period, total noncash payments increased 12%, from $161.2 trillion to $180.3 trillion.

Despite the increase in fraudulent activity, there was still only an estimated $0.46 of fraud for every $10,000 of noncash payments in 2015, compared to $0.38 of fraud for every $10,000 of noncash payments in 2012.

The study’s survey of payment card networks, which collected data on credit and debit card payments for 2015 and 2016, showed continued increases in the value of fraudulent card payments by credit, prepaid debit and non-prepaid debit cards, as well as increases in the number of fraudulent card payment incidents.

The Fed’s report on the study said a stable overall fraud rate for cards masked a substantial shift away from in-person fraud toward remote, or card-not-present, fraud.

While in-person card fraud dropped from $3.68 billion in 2015 to $2.91 billion in 2016, remote card fraud increased over the same period from $3.4 billion to $4.57 billion.

Madeline Aufseeser, CEO and co-founder of fraud prevention company Tender Armor, told Bank Innovation the study basically confirmed what industry professionals and institutions have known for a while now.

“The coming tide of card-not-present fraud was expected to happen,” she said. “We believe that 2016 was actually the tipping point for when card-not-present fraud was going to start escalating versus point-of-sale fraud, which is starting to wane away.”

Aufseeser referenced the widespread migration to chip technology and the adoption of the new technology among merchants at their point-of-sale terminals as likely causes for this trend. Another factor not referenced in the Fed’s report, she said, was a rise of digital content providers like Facebook, Google and Apple that are more aggressively marketing content to consumers remotely.

The Fed study found fraud using counterfeit cards declined from $3 billion in 2015 to $2.6 billion in 2016 as the share in the value of in-person payments using a chip instead of a magnetic strip increased from 3.2% to 26.4% over the same period. 

As the report says, chip cards are harder to counterfeit, and chip-authenticated payments are more secure than their magnetic strip counterparts.

Meanwhile, card-not-present payments were more prone to fraud than card-present payments and ATM withdrawals. In 2015, the fraud rate of card-present payments and ATM withdrawals was already less than two-thirds of the fraud rate of card-not-present payments.

“There are more challenges associated with card-not-present fraud and that’s why we actually entered the market when we did, because we saw this tidal wave coming,” Aufseeser said of Tender Armor’s CVV+, a dual-factor fraud prevention product.

She said the company believes dual-factor authentication is the key to combating card-not-present fraud.

“We believe that that is one of the few ways you can help mitigate it, especially in scenarios where that authentication is actually going back to the bank card issuer as opposed to occurring on a device or on a piece of plastic,” she said. “That kind of authentication is central to the device. It doesn’t necessarily mean that the person who is being authenticated is actually who they say they are, it just means that the device they’re using is a known device.”

Aufseeser said dynamic CVVs travel back in the transaction stream to the issuer to confirm a purchaser is who they say they are. She said dynamic CVVs also add a layer of protection by using a proxy number that keeps the consumer anonymous.

“What happens with biometrics is if your fingerprint gets compromised or gets out in the marketplace you can’t exactly cut your finger off and get a new fingerprint,” Aufseeser said. “Having a dynamic number not attached to a consumer or their account number is far more secure and far more effective.”

The Fed study found that total card fraud increased to $7.48 billion in 2016 from $7.07 billion in 2015, representing an increase of 5.8%. The number of fraudulent card payments increased to 71.4 million in 2016 from 63.5 million in 2015, an increase of 12.4%.

Although fraudulent payments are only a drop in the bucket compared to overall payments, the Fed says the study’s findings tell a “consistent story of dynamic change” in payments fraud.

“As consumer and business payment habits evolve because of technological change and other factors, so do the efforts of fraud perpetrators,” the Fed’s report says. “Financial industry efforts to prevent payments fraud should remain vigilant.”