New data released today by the payments industry self-regulatory body, Australian Payments Network (AusPayNet), has shown a slight increase in online card fraud in 2020 as the shift to online payments accelerated with the onset of COVID-19 in Australia.
AusPayNet’s latest payments fraud report shows that the overall spend on Australian cards was down by 2.2% to $801.7b, the first drop recorded. The overall value of card fraud increased by 0.6% to $467.6m, following a 19.5% drop in 2019. Australians are not liable for fraud on their cards and will be reimbursed as long as they take due care.
Card-not-present (CNP) fraud, mainly affecting online card transactions, increased by 3.8% to $418.9m, alongside a surge in online spending driven by lockdowns and other restrictions during the pandemic. The NAB Online Retail Sales Index estimates that online retail spending grew by 44% in 2020.
The value of other types of card fraud fell to new lows: lost-and-stolen card fraud declined by 25% to $26.3m, the lowest recorded since 2012, while counterfeit/skimming fraud slumped by 34% to $11.1m, a record low.
AusPayNet CEO Andy White said the industry remained vigilant as e-commerce volumes grew strongly during 2020.
“Indications are that many of the spending patterns and trends established during COVID will remain once we emerge from the pandemic - that is likely to be the case with online shopping,” Mr White said.
“The good news is that the industry-wide initiative put in place to mitigate CNP fraud two years ago has had a significant impact. Among other things, it encourages more stringent customer authentication by merchants and issuers, which can very quickly reduce fraud,” he said.
CNP fraud occurs when valid card details are stolen and used to make purchases or other payments without the card being present at the point of sale, usually online.
Under the CNP Fraud Mitigation Framework introduced in 2019, merchants who consistently exceed agreed fraud threshold targets are required to introduce strong customer authentication. The Framework also encourages secure technologies such as real-time monitoring, machine learning and tokenisation.
The card fraud rate in 2020 was 5.8 cents for every $100 spent on cards, up slightly from 5.7 cents the previous year but still well below historic levels in Australia and in comparable countries internationally.
To prevent payments fraud, AusPayNet advises consumers to:
* Only provide card details on secure and trusted websites - look for the locked padlock icon and be wary of offers that look too good to be true
* Treat unsolicited emails and text messages from people they don’t know with suspicion - don’t click on the link provided and don’t be tricked into divulging confidential data such as passwords
* Regularly check statements and report any unusual transactions to their financial institution immediately
* Register for, and use, their financial institution’s online fraud prevention solutions, whenever prompted
* Enrol in push notifications to receive an alert each time a transaction is made on their account
* Do checks to make sure the online business they are paying is legitimate
* Always keep PC security software up-to-date and do full scans regularly.
AusPayNet’s report also indicates that as measures to counter card fraud take effect, criminal groups are turning their attention to making money from scams. The Australian Competition and Consumer Commission (ACCC) reports that Australians lost $851m to scams in 2020, up 34% on 2019.
“We know from experience that as one area of payments fraud becomes harder to perpetrate, criminal groups turn their attention to other areas, as is evident in the rise in scams,” Mr White said.
Financial institutions continue to take a proactive approach to reducing the impact of scams on customers, including by:
* Working in close collaboration with law enforcement
* Increasing education and awareness through targeted campaigns and internet banking messaging to help susceptible customers
* Monitoring unusual transaction activity, and requesting further confirmation of abnormal or large transfers of funds
* Introducing new payment methods that are inherently more secure
* Extending information sharing capabilities to ensure strong coordination and collaboration across the financial services industry and with other industries.
Building on significant efforts already underway, AusPayNet has established the Economic Crime Forum, which will bring together a broad set of participants to coordinate a joint response to all economic crime - scams, fraud, financial crime and banking-related cyber incidents - and share intelligence on emerging threats.
“The shift to digital payments has sped-up rapidly and consumers and businesses need to be aware of the possibility of scams in the online environment,” Mr White said.