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Fuel Payments - Alternate Fuels are leading to Alternate Fraud

How can the payments and fuel industries get prepared for the adoption of future vehicle technologies?

Building a greener and more sustainable economy means consumers need to change how they consume, and businesses need to change how they produce and adapt their offerings to better meet consumer demand. Many businesses are realising they will benefit from cleaner and safer production, increased resource efficiency, as well as more transparency and corporate responsibility. However, the rise of climate awareness and the need to ‘go green’ and take responsibility for our surroundings has affected some industries more than others.

Two industries that have already been forced to change are the vehicle and fuel industries. Hybrid vehicles, electric vehicles, EV charging, biofuel, and other alternate fuels are now terms (and products) that have entered the general vernacular and are revolutionising the global fuel and vehicle landscape. Electric Vehicles have gone from a 0.1% share (of the new car market) in 2011 to 4.3% in 2020, with that figure expected to increase to 25% globally by 2025 to meet anticipated changes in government regulation.

These changes have resulted in a shift in the market for many existing fuel card suppliers, such as the Shell Group, who have expanded their portfolio to include the likes of Ubitricity, the UK's largest public EV charging network. We are seeing those traditional card issuers venture into the payments market too. Ensuring their EV charging points accept mobile and app payments, for example, as they become the preferred form of payment for many consumers.

However, as the industry continues to embrace alternate payment methods, fraud is also changing. Older methods, such as sim swap fraud, are being adapted and new types of fraud are being developed, such as QR code fraud, where fraudsters set up a QR code that redirects a user to a fake payments website to steal details. In its simplest form, this means that fraudsters can place a QR sticker on a fuel pump and direct users who are using mobile phone payments to their own databases. The more advanced changes can even see fraudulent NFC readers set up to redirect payments to a different account, working the same as card skimmers now, just in a non-contact way. 

Consumers are also less likely to check the final total of a contactless payments – meaning with some hi-tech working, a $50 fill up could show as $70 on the final payment portal (for post-payment transactions). $20 would then be siphoned off to the fraudsters account and the retailer gets the $50 it was owed. This works because the time it takes to make a contactless payment means there is less time to look at the value on the screen.

Sim swap fraud, the act of duplicating a sim to gain access to payment applications, is another example of a persistent and growing threat. With one security solution provider reporting a 600% increase in this type of fraud being perpetrated over the last 12 months. This means that alternative fuel retailers need to ensure that the correct protocols are put in place to ensure that fraudsters cannot ‘crack their apps.’

Sim swap fraud has been around for a long time and its affects are well documented – but the act of fraudulently obtaining a duplicate sim, either by data theft or by social conditioning, and then using it to redirect two facto authentication and verification, as well as duplicating any number linked apps to another device, has the potential to cripple the alternative fuel payments industry. Allowing fraudsters to access banking apps, payment apps and digital wallets. Not only that, but data can also be stolen via Bluetooth and Wi-Fi from these applications if their security is compromised.

Most major banks and payment providers are aware of these risks and have already taken them into consideration, but a new market, like alternative fuel, is always more vulnerable. As a result, providers need to understand that any payments application needs to focus on security, as much as customer experience. The use of digital wallets in the B2B fuel payments world also raises a lot of logistics questions. Typically for larger fleets, the rule of thumb is that a fuel card stays with a vehicle, but this makes it very difficult to pay for fuel and an EV charge via an app that is linked to a mobile device.

Can you entrust the application to your drivers’ personal phone? The fact that internal fraud has risen across all industries means this is potentially problematic. How do you know how secure an individual’s phone is? Some may still be susceptible to data theft via Wi-Fi, whereas other brands may be less so. Should you give each vehicle a phone? This could considerably increase the cost of running a fleet of vehicles and leads to questions about the safety of leaving these devices in an unattended vehicle, as well as who is responsible for charging these devices. Most drivers would probably not be happy if their payments phone died, and they had to bear the cost (even temporarily) themselves.

The issues do not stop at EV recharging, but with a recharge taking longer than a traditional ‘fill-up’, the retail experience and concourse becomes more important and interesting to drivers of electric vehicles. Many traditional fuel cards can be used to purchase food or vehicle accessories, so with recharging expected to take at least 30 minutes for a smaller vehicle, this becomes a requirement for alternative fuel cards. Currently, it would be unusual for a fuel card to purchase a meal deal every day, but in the future, it might be difficult to spot someone using a card fraudulently if the frequency they use the card for additional purchases increases.

This is significant, as one of the major benefits of alternate fuels, especially EV, is that there is virtually no resale value. As a result, fraudsters will switch their attention away from the fuel onto other items, and when you start to factor in the possibility of allowing fuel card holders to use them to buy anything on the concourse, you start to see how fraudsters can use it to their advantage. Purchasing expensive car accessories, all the way through to cigarettes and food, all have a potential re-sale value, especially if you’re using a stolen wallet to make that purchase. This is something that issuers need to be aware of and begin to take precautions for.

It is imperative that we continue to focus on enhancing technology and preventative measures within the alternative fuel ecosystem.  To do this effectively, we need to know where and how individuals learn the techniques for committing fraud and safeguard against creating process gaps, where individuals may become tempted to commit fraud by adopting a constant lesson’s learnt approach, which is why communication and collaboration as fraud prevention agents is key.  Standing still is not an option.

 

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Transaction Fraud Systems and Analysis

A community for discussion of Transaction Fraud systems and anlaytical techniques for bank card and financial services organisations.


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