Leaping higher than Australia’s iconic kangaroo, credit card fraud is up to a record-breaking $278.2 million as the boom in online shopping leads to more Australians being bilked by online bad guys.
Australians make more than 140 million card transactions a month. That puts them among the most prolific card users on the planet. And that makes fraud a major concern for banks and the public.
Australian Payments Clearing Association (APCA) figures show 1.1 million fraudulent credit card schemes took place last year with an average value of $250 per fraudulent transaction. That works out to $96.04 in fraud for every $1000 spent, up from $67.24 for every $1000 in 2010.
A whopping 71% of the credit card fraud cases were for CNP or card-not-present. That’s a transaction where the consumer is not face-to-face with the retailer but does his/her purchasing via the Internet, phone or by mail.
Banks have managed to cut fraud 18% at EFTPOS, the most widely used debit card system in Australia, accounting for around 80% of debit card transactions. By introducing chip credit cards (a security chip is embedded in the card), transactions where the card holder is present have declined sharply. Which, of course, has led to criminals switching to telemarketing and the Internet.
Following is APCA payment fraud data for the calendar year 2011, compared to 2010:
• Total fraud (cheque or checks and payment cards) rates have risen from 11.4 cents to 16.2 cents in every $1000 transacted. The incidence has increased from 16.6 to 21.3 per 100 000 transactions.
• Cheque/check fraud rates fell from 1.3 cents to less than one cent (0.7) in every $1000 issued. The incidence fell to around 1 in 300 000 transactions.
• Proprietary debit card fraud fell from 7.9 cents to 4.9 cents in every $1000 transacted. The incidence decreased to 2.5 from 1.3 in every 100 000 transactions.
• Scheme credit, debit and charge card fraud increased from 67.2 cents to 96 cents in every $1000 transacted. The incidence has risen from 38.4 to 51.7 in every 100 000 transactions.
Steven Munchenberg, chief executive of the Australian Bankers’ Association said “Dealing with card-not-present fraud requires vigilance from all involved in the transactions such as the banks, other payment providers, the retailers and the consumers. And the focus is not just domestic because a lot of the transactions are being done offshore via the Internet.”
In a Sydney Morning Herald story, Eric Johnston, the financial services editor, offers consumers tips. Many are common sense. And all are common not only to Australia, but to everyone who uses credit cards anywhere in the world – especially online.
• Always be careful to shield your PIN when using an ATM or EFTPOS terminal. Use a free hand to cover the key pad while you enter your PIN.
• Memorize your PIN and don’t record it in your wallet, phone or personal digital assistant (PDA).
• Be vigilant in checking your statements. Always report any unauthorized or suspicious transactions billed to your account and immediately contact your bank.
• When shopping online, it’s important to shop using secure websites which use protective encryption technology to transfer information from your computer to the online merchant’s computer system which keeps confidential information such as your credit card details.
• Install and keep up-to-date anti-virus and firewall software on your computer.
• A bank will never send you an e-mail asking you for your PIN or other security information. If you receive an e-mail which asks for this, delete it.
Munchenberg has this advice. “Before making a purchase, it’s important that you do some research on the merchant, so that you can be confident that you are transacting with a business that you can trust and a business that will protect your personal information, including your credit or debit card details.
“When buying online, sometimes businesses request large amounts of information they don’t need, so think about limiting the amount of information before providing it. Never send your credit card number by e-mail. E-mails are not secure.”