In spite of efforts to halt electronic fraud, the internet has remained a dangerous place to do business, according to a report from the European Commission. It reported 10 million fraudulent transactions that cost European Union merchants a cumulative 1.5 billion Euros (US$1.5 billion) in losses each year.
In particular, the report, which is available here, noted a significant increase in what it called "skimming fraud." This is the practice of illegally coping the data on magnetic strips, then producing counterfeit cards that are used in non-EVA (Europay, Visa, MasterCard) terminals and for non-face-to-face environments such as internet payments, the report indicates.
The EU Commission report on fraud and countermeasures taken between 2004 and 2007 reveals that although the number of fraud cases is a small percentage of the overall number of transactions using new payment services, the fraud weakens the overall confidence level of European Union residents.
Moreover, electronic payment fraud has increasingly moved to non-face-to-face situations such as Internet payments, the report said. The report said this so-called “card-not-present" type of fraud is increasing in Europe and is considered to constitute the highest threat for the payment card industry.
"Payment fraud is a moving target," the report said. "New threats appear, in particular identity theft/fraud and, more generally, cyber crime, which includes many of the identity theft/fraud typologies."
A pair of EU legislation actions has attempted to address cybercrime issues. These payment-services and money-laundering directive laws include a "know your customer" rule for electronic transactions that is intended to cut down on electronic fraud.
Still, the commission said that "increasing public awareness and education to enhance trust and also to avoid the pitfalls of payment fraud is important."
Action now being planned includes running campaigns to enhance the general public's awareness of the fraud issues are in the planning stages, according to the commission. Activities planned include hosting events that highlight the hazards of electronic payments.
See original article on scmagazineus.com
EU Commission says payment fraud moving to the internet
By Jim Carr on Apr 29, 2008 9:43AM