Warning for consumers as payments fraud rises

They are smart, sophisticated … and heartless.

As international scammers outdo themselves to rip off consumers, Australian shoppers and retailers are being warned about the risk of online fraud. The con artists are increasingly taking advantage of card-not-present, or CNP, fraud to rip off the public. This type of crime occurs when credit card details are stolen and then used to make purchases online without the need to physically produce a card at the point of sale.

A payments fraud report from the Australian Payments Clearing Association, the payments industry’s self-regulatory body, reveals that card fraud is on the rise when people go online, but that chip technology is proving effective in stopping counterfeit fraud.

“Counterfeit fraud is dropping in Australia as a result of chip technology and closer cooperation between financial institutions and law enforcement,” APCA’s Andy White said.

“Fraud is a constant battle and, as the industry’s efforts prove effective in this channel, criminals are moving online.”

High price to pay

According to the APCA report, titled Australian Payments Fraud – Details and Data, of the $1.92 trillion that Australians spent on cheques and cards in 2015, 0.025% or $469 million worth of transactions were fraudulent.

The nation’s rate of card fraud is up from 58.8 cents in 2014 to 66.8 cents per $1000 spent for the latest period, with the hike largely attributable to CNP fraud, which accounts for 79% of all Australian card fraud by value.

The findings are a timely reminder for Australians to remain vigilant when shopping online during the holiday period. The APCA notes that a crackdown on fraud in the US has seen scammers shift their focus, including to Australians. “As the US progressively rolls out chip technology, criminals are targeting those terminals that are still mag stripe only and Australian cards have been caught up in this fraud.”

The report outlines industry measures that can be taken to prevent payments fraud, including:

  • Reducing chances for card data to be stolen via ongoing efforts by merchants and service providers to comply with global security standards for cards
  • Identifying and stopping fraudulent payments in real-time through the use of chip technology and dedicated analytics tools
  • Insisting on higher levels of authentication for cardholders, including greater use of one-time passwords and biometrics and the mandatory use of PINs for card-present transactions.

Retailers are on the frontline of efforts to stop the scammers. The APCA recommends that they use a fully hosted payment gateway provider to collect payments, while they are also urged to watch out for suspicious transactions such as unusually large orders.

They should also avoid shipping re-saleable goods to a temporary address such as a hotel or to a PO box number, and they are advised to take advantage of online authentication tools such as Verified by Visa and Mastercard SecureCode.

How consumers can protect themselves against online card fraud

  1. Ensure your computer security software is up to date and do regular security scans.
  2. Provide your card details on secure websites only – look for the locked padlock symbol.
  3. Register for and use your financial institution’s online fraud prevention solutions.
  4. Check your account statements and immediately report any suspicious transactions to your financial institution.

Find out more about Indue’s fraud management services and other leading-edge technologies, or contact a member of our expert team.

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