AusPayNet fraud data shows industry initiatives are making an impact, but consumers and merchants must remain vigilant online

MEDIA RELEASE

14 November 2022

AusPayNet fraud data shows industry initiatives are making an impact, but consumers and merchants must remain vigilant online

Data released today by the industry self-regulatory body Australian Payments Network (AusPayNet) showed the fraud rate in the 12 months to 30 June 2022 (FY22) was 54.7 cents per $1,000 spent, down from 57.8 cents the previous year.

The data, released during International Fraud Week, indicates that the fraud rate has stabilised since the introduction of the industry’s card-not-present (CNP) Fraud Mitigation Framework (CNP Framework) in 2019: the FY22 fraud rate remains well below the FY18 fraud rate of 73.8 cents per $1,000 spent.

While fraud on payment card transactions increased 1.9% in FY22, this was a significant reduction on the 9.2% increase the previous year, and was significantly lower than the increase in total spending on cards, which rose 7.8% to $913.7 billion over the same period.

CNP fraud accounted for 91% of all fraud on Australian cards in FY22, coinciding with a rapid rise in e-commerce fuelled by the pandemic. However, its growth slowed during the year, with CNP fraud increasing by only 2.9% to $454.6 million.

The data also confirms continued downward trends in other types of fraud:

• Counterfeit/skimming fraud fell by 45.8% to $4.8 million^*
• Fraudulent-application fraud fell by 56.3% to $0.8 million^*
• Card-never-received fraud fell by 44.2% to $1.4 million^*
• Other card fraud fell by 2.2% to $6.6 million.

*Record low since 2010, when AusPayNet’s fraud reporting commenced.

Lost-and-stolen fraud increased by 11.4% to $31.2 million, attributed to consumers exiting pandemic lockdowns across the country.

AusPayNet CEO Andy White said rising e-commerce volumes underscored the importance of the CNP Framework and industry coordination to target the activities of fraudsters and organised crime.

“Online transactions continue to grow strongly, with consumer behaviours evolving since the onset of the pandemic. Industry counter-fraud efforts have helped stabilise the overall fraud rate and caused significant reductions across most card fraud types,” Mr White said.

“Industry-wide efforts to mitigate CNP fraud and organised crime will remain important, but merchants and consumers also need to be vigilant when transacting online,” he said.

CNP fraud involves valid card details being stolen and used to make purchases or other payments without the card being present at the point of sale, usually online. Consumers are not liable for fraud losses on payment cards and will be refunded, so long as they have taken due care with their confidential data.

The end of FY22 marked the third full year of operation of the industry’s CNP Framework, which requires merchants who consistently exceed agreed fraud threshold targets to strengthen customer authentication and apply other measures. The framework also encourages secure technologies such as real-time monitoring, machine learning and tokenisation.

AusPayNet sponsors the Economic Crime Forum (ECF), the successor to the Fraud in Banking Forum, which brings together industry, law enforcement and government stakeholders to coordinate joint responses to economic crime including scams, fraud, financial crime, and banking-related cyber incidents.

AusPayNet is leading collaboration with these industry stakeholders through its Scams Mitigation Strategy and Program, which seeks to make Australia a hard target for international scammers.

In the lead up to the Christmas holiday season, and in response to recent cyberattacks and data breaches, consumers and merchants are reminded of the steps they can take to protect themselves from ID theft, fraud and scams. Steps consumers can take include:

• Only providing card details on secure and trusted websites – look for the locked padlock icon and be wary of offers that look too good to be true
• Treating unsolicited emails and text messages from strangers with suspicion – don’t click on the link provided or be tricked into divulging confidential data such as passwords
• Regularly checking statements and immediately reporting any unusual transactions to their financial institution
• Registering for, and using, their financial institution’s online fraud prevention solutions, whenever prompted
• Undertaking checks to ensure the online business with which they’re transacting is legitimate
• Using credit checking and monitoring services
• Always keeping PC security software up-to-date and doing full scans regularly.

Guidance for merchants:

• Use tools that help you authenticate your customers: a tool that supports risk-based authentication in the first instance, and strong customer authentication for transactions identified with a higher risk profile, is critical to reducing fraud
• Invest in tokenisation: merchants holding sensitive account holder information can become targets for fraud. Tokenisation replaces this information with a unique digital identifier (a token)
• Regularly speak to your acquirer and gateway providers about what you can do to secure your business.

The figures released today are available on the AusPayNet website.

More information on AusPayNet’s CNP Fraud Mitigation Framework can also be found on the AusPayNet website.