The rate of fraud per $1,000 transacted has been in the range of 6.3 cents to 9.0 cents over the past three years for cheque, debit, credit and charge cards, according to data released by the Australian Payments Clearing Association (APCA)¹.  The average rate of fraud per $1,000 transacted over this time has been 7.2 cents.  

In terms of the incidence of fraud, this has been between 7.1 to 11.6 incidents per 100,000 transactions, with an average of 9.3 incidents per 100,000 transactions over the past three years.

Key results for each of the payments instruments are²:

• Cheque fraud –
  • the fraud rate is currently 0.88 cents per $1,000 transacted which is below the three-year average of 1.08 cents;
  • the latest survey results show there were 0.43 incidents per 100,000 cheques written which is just above the three-year average of 0.42.
     
• Debit card fraud –
  • the fraud rate is currently 8.5 cents per $1,000 transacted which is above the three-year average of 7.4 cents;
  • the latest survey results show there were 2.1 incidents per 100,000 transactions which is the same as the three-year average.
     
• Credit and charge card fraud –
  • the fraud rate is currently 52.8 cents per $1,000 transacted which is above the three-year average of 46.5 cents;
  • the latest survey results show there were 24.5 incidents per 100,000 transactions which is above the three-year average of 19.6.

As in previous years, Australian fraud rates are still low compared with the UK. Australia’s total payment card fraud rate (debit card, credit card and charge card) increased by 1 cent in every $1,000 (from 32 cents in 2008 to 33 cents) and remains low by global standards.  The UK’s card fraud rate is the equivalent of about $1 in every $1,000 – that is about three times higher than Australia’s payment card fraud rate. 
  
David Bell, Chief Executive of the ABA, said: “Even though there has been a slight overall increase in fraud incidence over the past three years, the average rates of fraud remain very low when compared with the billions of transactions which cycle through the payments system.”

“This is a testament to banks making continuous improvements and investments in security solutions across all the different banking channels to protect their customers,” he said.

Examples of the banking industry’s security enhancements include:

• systems to monitor transactions on a customer’s account, and if a transaction is identified as being suspicious, it will be investigated to ensure there is no breach of security. Your bank may telephone you to verify a transaction;
  
  
• systems at ATMs to prevent skimming and theft of the machine;
  
  
• two factor authentication for online and Internet banking transactions, delivered through SMS messages or via a token;
  
  
• roll-out of chip cards³ and use of PIN on credit and debit cards.

Mr Bell said it was disappointing to see increases in card-not-present fraud – that is when customers use cards to make purchases online or via the phone - and skimming, that is the unauthorised copying of information stored on the magnetic strip of debit and credit cards by criminals at ATMs and EFTPOS machines which then can be used to create a counterfeit card.

He added that it is important to note that the current regime protects customers – generally customers do not bear the losses, the banks do.

“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,” he said.

Banks and customers working together can make it harder for criminals to commit fraud. Some customer security tips are listed below which can mitigate against fraud using 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).
• You should treat your card like it’s cash and make sure you never lose sight of it. If possible, don’t give your card to a waiter or shop assistant and let them walk out of your sight.
• Be vigilant in checking your statements. Always report any unauthorised or suspicious transactions billed to your account and contact your bank immediately, even if the unauthorised transaction is a very small amount.
• 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.
• If you notice something unusual about the ATM, report it to your bank or other ATM owner immediately.
• Install and keep up-to-date anti-virus and firewall software on your personal 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 immediately, do not reply or click on any link in the e-mail.