Payments Fraud

Fraud on Australian cards continues to increase in the online environment reflecting a global trend towards increasing cybercrime risks.

MEDIA RELEASE

15 June 2015

Payments fraud on Australian cards occurring mainly online

A new report released today by the Australian Payments Clearing Association (APCA), the payments industry self-regulatory body, shows that fraud on Australian payment cards continues to increase in the online environment reflecting a global trend towards increasing cybercrime risks.

The comprehensive report “Australia Payments Fraud – Details and Data” provides new payment fraud data for 2014 and a graphical overview of trends from 2009 to 2014.

The new figures show that in 2014 fraud on Australian cards and cheques increased from 16.2 cents to 20.8 cents per $1,000 spent. Within this total:

Cheque fraud remained under 1c in every $1,000.
Fraud on Australian payment cards increased from 46.6c to 58.8c in every $1,000 spent.

Card-not-present fraud, occurring mainly online, by phone or by mail, accounted for 94 per cent of the increase in card fraud. The figures for Australian payment cards show that in 2014:

Card-not-present fraud increased by 42 per cent to $299.5 million (up from $210.4 million in 2013).
Two-thirds ($200.6 million) of card-not-present fraud occurred overseas (up from $124.5 million in 2013).
Card-not-present fraud made up 77 per cent of all payments card fraud in Australia by value (compared to 52 per cent in 2009).

The scale of card-not-present fraud on Australian cards is in line with global trends. In 2014, card-not present fraud in the United Kingdom was up 10 per cent from last year to 331.5 million pounds.

Increasing card-not-present fraud on Australian cards needs to be seen in the context of:

Continued strong online spending by Australians: according to a study of consumer payments by the Reserve Bank of Australia, card activity in the card-not-present environment represents about 40 per cent of the total value of credit card purchases and nearly 25 per cent of debit card.
Migration of fraud to the online space as chip technology becomes more widespread: as industry measures to reduce payments fraud in one area take effect, criminals switch to other areas where frauds are easier to perpetrate.
The growing threat from cyber criminals experienced by governments, businesses and individuals worldwide: card-not-present fraud is just one manifestation of this threat.

APCA CEO Chris Hamilton said, “As criminals continue to increase their focus on cyber space, the industry is working to respond with innovative fraud prevention measures.”

One example of this is the industry roll out of tokenisation. This is a technique that replaces sensitive information, such as a card number, with a non-sensitive replacement value or token. If captured, the token itself cannot be used for normal card-not-present transactions and as such is of no value to criminals.

This extra security layer will complement the industry’s existing card-not-present fraud prevention measures including enforcing standards to protect card data, stronger cardholder authentication techniques and enhancing real-time fraud detection tools.

The figures for 2014 also show that:

Counterfeit / skimming fraud increased from $36.1 million to $42.1 million, well down from its peak of $66.0 million in 2011. The recent increase is largely due to skimming attacks on ATMs over the last year.
Lost and stolen fraud in Australia and overseas increased slightly from $32.2 million to $33.0 million, but Australian fraud dropped 7.1% from $21.2 million to $19.7 million.

Today’s report 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, moving to chip-reading at ATMs and mandatory PIN authentication on most cards from November 2014.

“Contrary to some recent media speculation, today’s figures provide no support for the suggestion that ’tap and go’ chip cards are at greater risk of fraud. They show that the much bigger challenge is online fraud, as we all spend more time and money in cyberspace. In this rapidly evolving digital environment, we need to stay ahead of the cyber criminals”, said Mr Hamilton.

“Australia Payments Fraud – Details and Data” is available at www.apca.com.au

ENDS

Media Contact: Ida Turner, APCA Communications Tel: (02) 9216 4817 Mob: 0409 716 556

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.

Australian Payments Clearing Association Limited ABN 12 055 136 519
Level 6, 14 Martin Place, Sydney NSW 2000 Telephone +61 2 9216 4888 Facsimile +61 2 9221 8057 www.apca.com.au