Payments Fraud

Detection and prevention measures employed by the industry are showing promising results in putting downward pressure on fraud.

MEDIA RELEASE

Sydney: 17 June 2014

New payments fraud report

The Australian Payments Clearing Association, the payments industry self-regulatory body, today released a new report to help inform businesses on Australian payments fraud trends and effective measures and practices to help combat fraud. It coincides with the release of new payments fraud figures for 2013.

The report “Australia Payments Fraud – Details and Data” shows that payments fraud in Australia is increasing as part of a global trend, but that detection and prevention measures employed by the industry are showing promising results in putting downward pressure on fraud.

In 2013, the total rate of fraud on Australian cards and cheques increased from 15.0 cents to 16.9 cents per $1,000 spent.

Cheque fraud remained under 1c in every $1,000.
Fraud on Australian payment cards increased from 43.6c to 48.7c in every $1,000 spent, down from the peak of 51.5c in 2011.

This increase is largely due to a rise in card-not present-fraud with the report showing that the trends seen in recent years continued over the last year. On Australian cards, in 2013:

Card-not-present fraud increased from $183.1 million to $219.7 million. This needs to be seen in the context of the strong growth in online spending by Australians: in the four years to December 2013 online purchases increased by an estimated 140%. This compares to a 67% increase in card-not-present fraud over the same period.
Counterfeit / skimming fraud remained at $37.2 million, well down from its peak of $66.0 million in 2011. The use of chip technology is continuing to prove effective in countering this type of fraud.
Lost and stolen fraud increased from $27.0 million to $34.0 million. This suggests that as enhanced fraud detection tools and chip technology make it more difficult for criminals, they are reverting to simple theft and deception to obtain cards.

The report shows that measures by the industry to limit card fraud are having an effect in keeping fraud rates comparatively low. In 2013, Australia’s card fraud rate was a third less than that of the UK.

APCA CEO Chris Hamilton said that fraud trends are being influenced globally by changes in the way people shop, in payment technology and in criminal activities.

“Card-not-present fraud has gone from making up less than half of all card fraud in 2008 to reaching 72% in 2013. The biggest factor here is the very high growth rate of online retail,” said Mr Hamilton.

“The challenge for the industry is to get every online merchant to protect card data by complying with the PCI standards, and to extend the use of the strong authentication methods and detection tools available,” said Mr Hamilton.

The report also highlights measures underway to help further reduce counterfeit/skimming fraud and lost and stolen fraud including the roll-out of chip on proprietary debit cards, chip-reading at ATMs and the phasing out of signatures in favour of PIN from August 2014.

“We are living through a profound and permanent change in people’s spending habits, as shopping goes virtual. The economic and social benefits of that are powerful, but the new report helps the community scrutinise and better manage the fraud side-effects. We can see the longer- term trends and where to focus fraud prevention efforts,” said Mr Hamilton.

“Australia Payments Fraud – Details and Data” is available at www.apca.com.au. APCA plans to release this report on an annual basis.

For further information:

Dr Brad Pragnell, Head of Industry Policy P: (02) 9216 4837 M: 0408 438 618

ENDS

Tips on how to protect against online card fraud

Tips for consumers:

Always keep your PC security software up-to-date and do a full scan often.
Only provide your card details on secure websites - look for the locked padlock.
Register for, and use your financial institution’s online fraud prevention solutions whenever prompted.
Check your account statements and report any suspicious transactions to your financial institution.

Tips for retailers:

Use a fully hosted payment gateway provider to collect payments on your behalf.
Watch for suspicious orders. Is the order unusually large for your business? Is the customer trying various cards in order to make a successful payment?
Avoid shipping re-saleable goods to a temporary address (e.g. hotel) or to a PO box number.
Never take payments on behalf of any other business or person.
Only make refunds to the card originally used to pay for the goods.
Take advantage of the tools available such as online authentication methods – American Express Safekey, MasterCard SecureCode and Verified by Visa