Low-Tech Schemes Drive Up Banking, Card Fraud Losses
By Gulf News
Criminals devise various tricks to get a hold of customers’ banking, credit or prepaid card details — some very modern, others pretty basic. As financial institutions are investing heavily on sophisticated, high-tech fraud prevention tools, crooks are going back to basics to steal money from consumers.
Industry analysts confirmed that low-tech frauds, such as distraction thefts and cardholders being tricked into giving their plastic money and personal identification numbers to scammers, have driven up the numbers of online banking and card fraud losses.
According to the UK Cards Association, total fraud losses on UK cards reached £185 million (Dh1.02 billion) between January and June 2012. This is a 9 per cent increase on losses in the first half of last year (£169.8 million).
“It is very likely that the UAE will follow this trend, given that the banking and payments sector uses very similar technology,” Mike Braatz, senior vice president, payments fraud, at ACI Worldwide told Gulf News.
Experts said many criminals have switched to simpler tactics to get cash, because banks and other financial institutions have employed more sophisticated fraud prevention layers that are difficult to penetrate.
“In recent years, banks have placed considerable focus on tackling online banking fraud. There are a lot of prevention and detection software tools now used by banks to cut theft. Fraudsters will always find the lowest common point of infiltration, so older, less technical schemes will always continue to make cyclical appearance,” added Braatz.
Convenience versus security
Nicolai Solling, director of technology services at Help AG said the problem lies with customers who tend to place convenience over security.
“Something as simple as opting for PIN-based authentication for transactions is often disregarded in favour of authorisation by signature which is much less secure,” Solling said.
However, he said, the tougher competition brought on by the entry of new payment services such as near-field communication (NFC) and e-wallets will likely encourage financial institutions to “ramp up their offerings, while taking into consideration both convenience and security of their customers.”
Tips
There is no absolute protection against fraud, but banks can apply the following tips from Mike Braatz of ACI Worldwide to improve security:
• Banks should make the most of cutting-edge detection software to monitor transactions and watch out for abnormal behaviour patterns among their customers. If anything out of the ordinary is spotted, the fraud can be stopped in its tracks.
• Banks should educate their customers and employees about the risks they face. That means running awareness programmes and providing tips for safeguarding information.
• Banks should enlist consumers in combating fraud. When fraud is suspected, a large majority of consumers don’t want additional transactions posted to their accounts until after the issuer has heard from them concerning a fraud alert. This implies a willingness to be an active participant in the war against fraud.
Criminals devise various tricks to get a hold of customers’ banking, credit or prepaid card details — some very modern, others pretty basic. As financial institutions are investing heavily on sophisticated, high-tech fraud prevention tools, crooks are going back to basics to steal money from consumers.
Industry analysts confirmed that low-tech frauds, such as distraction thefts and cardholders being tricked into giving their plastic money and personal identification numbers to scammers, have driven up the numbers of online banking and card fraud losses.
According to the UK Cards Association, total fraud losses on UK cards reached £185 million (Dh1.02 billion) between January and June 2012. This is a 9 per cent increase on losses in the first half of last year (£169.8 million).
“It is very likely that the UAE will follow this trend, given that the banking and payments sector uses very similar technology,” Mike Braatz, senior vice president, payments fraud, at ACI Worldwide told Gulf News.
Experts said many criminals have switched to simpler tactics to get cash, because banks and other financial institutions have employed more sophisticated fraud prevention layers that are difficult to penetrate.
“In recent years, banks have placed considerable focus on tackling online banking fraud. There are a lot of prevention and detection software tools now used by banks to cut theft. Fraudsters will always find the lowest common point of infiltration, so older, less technical schemes will always continue to make cyclical appearance,” added Braatz.
Convenience versus security
Nicolai Solling, director of technology services at Help AG said the problem lies with customers who tend to place convenience over security.
“Something as simple as opting for PIN-based authentication for transactions is often disregarded in favour of authorisation by signature which is much less secure,” Solling said.
However, he said, the tougher competition brought on by the entry of new payment services such as near-field communication (NFC) and e-wallets will likely encourage financial institutions to “ramp up their offerings, while taking into consideration both convenience and security of their customers.”
Tips
There is no absolute protection against fraud, but banks can apply the following tips from Mike Braatz of ACI Worldwide to improve security:
• Banks should make the most of cutting-edge detection software to monitor transactions and watch out for abnormal behaviour patterns among their customers. If anything out of the ordinary is spotted, the fraud can be stopped in its tracks.
• Banks should educate their customers and employees about the risks they face. That means running awareness programmes and providing tips for safeguarding information.
• Banks should enlist consumers in combating fraud. When fraud is suspected, a large majority of consumers don’t want additional transactions posted to their accounts until after the issuer has heard from them concerning a fraud alert. This implies a willingness to be an active participant in the war against fraud.
