The Australian Payments Clearing Association (APCA) Payments Fraud data have shown that over 2009 there was a significant fall in the credit card fraud loss rate but debit card fraud loss rates increased due to skimming incidents.
 
Overall, the total rate of fraud, which includes both cheque and payment cards, has increased.

Steven Münchenberg, Chief Executive of the ABA, said: “It is pleasing to see in the data that banks’ security enhancements on credit cards, such as the roll out of Chip and PIN¹, are starting to take 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.”

“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 secure².

During the reporting period, there were well publicised skimming attacks in NSW and WA which impacted on the data. 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.

A Task Force comprising banks, police and retailers was formed to help protect consumers and encourage merchants to take extra security precautions with their EFTPOS terminals. Fraud protection guidelines for merchants were produced by APCA.

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.

The main findings from the APCA payments fraud data³ show that over the past year (2009):

• Total fraud (cheque and payment cards) has risen from 8.3 cents to 9.4 cents in every $1000 transacted.
  
• Cheque fraud rates increased slightly to 1.2 cents in every $1000. The incidence is around 1 in every 200 000 cheques.
   
• Debit card fraud increased from 5.8 cents to 9.4 cents in every $1000 transacted. The incidence has risen from 1.6 to 2.5 in every 100 000 transactions.
  
• Credit and charge card fraud decreased from 60.4 cents to 57.2 cents in every $1000 transacted. The incidence has risen from 24 to 32 in every 100 000 transactions.

Banks and customers working together can make it harder for criminals to commit fraud. Some security tips are listed below which can mitigate against fraud when customers using their cards, including when purchasing goods or services using the phone or the Internet, or withdrawing cash at the ATM.

Customer security tips

• 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.
• Memorise your PIN and don’t record it in your wallet or personal digital assistant (PDA).
• Be vigilant in checking your statements. Always report any unauthorised 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, and which keeps confidential information such as your credit card details safe.
• 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.