Credit card fraud declines, but debit card scams up
Fraud loss on credit cards declined slightly while scams on debit cards increased, the Australian Payments Clearing Association (APCA) Payments Fraud data show.
Over the 12 months to June 2010 compared to the previous year credit and charge card fraud decreased from 60.1 cents to 58.6 cents in every $1000 transacted. The incidence has risen from 28 to 34 in every 100 000 transactions.
Proprietary debit card fraud, however, increased from 7.4 cents to 10.7 cents in every $1000 transacted. The incidence has risen from 2.0 to 3.3 in every 100 000 transactions.
Cheque fraud rates increased slightly from 0.9 to 1.1 cents in every $1000. The incidence is around 1 in every 200 000 cheques.
Total fraud (cheque and payment cards) has risen from 9.0 cents to 9.9 cents in every $1000 transacted.
The fall in the credit card fraud loss rate indicate that industry efforts to prevent this criminal activity are continuing to take effect, the Australian Bankers' Association (ABA) said.
ABA chief executive Steven Münchenberg said he is pleased to see in the data that banks' security enhancements on credit cards, such as the roll out of Chip and PIN, are taking effect.
"Chip cards store encrypted information, which helps significantly in protecting the card against counterfeiting. A chip transaction generates a unique identifier and because each transaction generates a different identifier, this makes the counterfeit production of the card more difficult. In other parts of the world, it has proved very effective in fraud prevention," he said.
"Customers should be reassured that account holders are not liable for losses resulting from unauthorised transactions where it is clear that the user has not contributed to the loss. This is enshrined in the Electronic Funds Transfer (EFT) Code of Conduct."
Mr Münchenberg noted that debit cards will be moving to Chip technology with roll-out starting in 2011 and being completed over three years which will make EFTPOS transactions more secure.
During the reporting period, there were well-publicised skimming attacks on ATMs and EFTPOS terminals which impacted on the data in late 2009 and early 2010. Police advised that a large and sophisticated international organised crime network was responsible. The criminals targeted EFTPOS terminals at retail outlets and installed skimming devices to obtain personal information. Police have made some arrests in relation to these crimes.
The APCA data also showed there was an increase in card-not-present fraud - that is when customers use credit cards to make purchases online or via the phone.
Mr Münchenberg said: "Online shopping offers variety, discounts, choice and convenience. Shoppers should take some simple security steps such as making every effort to confirm the validity of the website, whether it is based in Australia or overseas, and the nature of the products they are purchasing. Criminals are known to advertise non-existent goods online, preying on the desire of online consumers to obtain a bargain."
Although card-not-present fraud has increased, the APCA results showed substantial improvements in other categories of credit card fraud, with fraud rates having decreased on lost or stolen cards, fraudulent applications and counterfeit.