Fraud on all Australian payment cards fell by 11% in 2012, following sustained efforts by financial institutions to counter card fraud schemes, new research finds.
Research from the Australian Payments Clearing Association shows the total value of fraud dropped to $261 million, or 43.5 cents in every $1000 transacted.
Counterfeit and skimming fraud on Australian-issued scheme credit, debit and charge cards used domestically and overseas fell by 53% over the past year to $27.6 million, the lowest level since 2006.
Despite many more Australians shopping online, the value of card-not-present (CNP) fraud has also dropped, decreasing 8% in 2012 to $183 million.
APCA chief executive Chris Hamilton said in a statement the drop in CNP fraud is encouraging, but more needs to be done.
“It is essential that retailers and consumers get smart about online card fraud by taking some simple but powerful security measures when on the net.
“The promising news reflects the sustained effort by card schemes, financial institutions, merchants and law enforcement agencies,” he says.
Despite the value of card-not-present fraud dropping, the actual number of fraudulent transactions increased from 854,693 in 2011 to 969,876 in 2012.
Australian Institute of Criminology principal criminologist Russell Smith told SmartCompany despite the value dropping, there is unlikely to be a sustained change.
“The results are likely to be due to the nature of things which are being lost. The security measures in place haven’t changed a great deal over the last couple of years. CCV numbers are still being used for online transactions and the more elaborate security measures are used for only some transactions,” he says.
Since 2006, Smith says the value of card-not-present fraud has increased significantly.
“It now results in almost $200 million being stolen, but in 2006 it was only $32 million. This is partly due to people buying more things online, but it’s also an issue about people spending more money on individual purchases.
“In the past, online fraud had a very low value, but now you can have thousands or tens of thousands being spent on purchases such as cars and overseas holidays,” he says.
Smith says regardless of the increase, the number of fraudulent transactions is still a relatively low proportion.
“Only about 0.5% of all card transactions are fraudulent.
“Unfortunately, people can lose fairly large sums of money and it really depends upon the goods and services people are buying online,” he says.
KPMG Forensic partner David Luijerink told SmartCompany the decline in card payment fraud mirrors similar results in the United Kingdom, which stem from improved detection systems and greater education, but no card present fraud now equates for a greater portion of total fraud.
“It’s partly the institutions who have spent a lot of money on improving their detection systems – particularly the big chains.
“The verification processes have improved, but a lot of it does come down to individuals being more aware and what transactions are going through their accounts. Consumers still need to be aware of the transactions taking place, even those of smaller values,” he says.
Luijerink says fraudsters could start looking for other avenues.
“It’s encouraging that it’s coming down, but what it does mean is that fraudsters tend to start looking for new areas of fraud to get their money. Now the banks and other organisations have made improvements, it’s quite possible they’ll look for other avenues,” he says.