APCA’s latest release of payments fraud statistics for the year ending 30 June 2009 shows that the patterns of card fraud on Australian issued cards are changing and the industry is responding with countermeasures.
For the first time, debit card fraud (that is, EFTPOS and ATM) increased slightly from 7.4 cents to 8.5 cents in every $1,000 transacted. The incidence of debit card fraud remained relatively unchanged at around 2 in every 100,000 transactions.
Credit and charge card fraud (that is, signature permitted and card-not-present) increased slightly from 51.5 cents to 52.8 cents in every $1,000 transacted. The incidence of credit and charge card fraud has risen from 21 to 24 in every 100,000 transactions.
The increase in Australia’s debit card fraud rate can largely be attributed to the skimming attacks at ATMs and EFTPOS devices reported in the media during the period. Skimming is where card details are illegally captured from magnetic stripe and then used to produce counterfeit duplicate cards. Often, fraudsters attempt to capture the PIN as well through 'shoulder surfing' or use of hidden cameras.
Against this, credit card and charge card skimming fraud experienced slower growth – up 5.1% this year. This compares favourably to the previous year, which saw a 59.7% increase. Nonetheless, credit and charge card skimming fraud now stands at $45 million.
The levelling off in skimming on credit and charge cards is good news and suggests that chip based authentication is starting to have an effect. While chip transactions at point of sale are already commonplace, the complete rollout is expected to take another three years. This major industry programme is clearly the key to combating card present fraud. In addition, individual financial institutions continually enhance their fraud detection measures and the industry is working to help increase consumer awareness.
(Years ending 30 June)
The increase in Australia’s credit card and charge card fraud was driven by card-not-present (CNP) fraud. Industry measures for tackling CNP fraud include the implementation of enhanced data security standards for computer systems and encrypted data links. Locally and internationally, financial institutions and card schemes are working with online retailers to implement additional security measures such as MasterCard SecureCode and Verified by Visa.
In the first half of 2009, the UK experienced its first ever drop in CNP fraud. According to Financial Fraud Action UK, a reason for this reduction is the growing use of industry countermeasures by retailers and consumers. As a result, the UK’s total card fraud rate dropped to the equivalent of about $1 in every $1,000. This remains three times higher than Australia’s total payment card fraud rate which is now 33 cents in every $1,000.
Click here to access APCA’s fraud data collection.