Fraudulent transactions on lost or stolen cards are up

Card fraud was up 16 per cent to $304 million in 2013, and the number of transactions on lost or stolen cards rose 26 per cent to $34 million.

The vast majority of the fraud was done online, accounting for $219.7 million, up 20 per cent on 2012, according to the latest figures from payments industry body the Australian Payments Clearing Association.

But since 2010, the number of fraudulent transactions for smaller amounts on lost or stolen cards appears to have jumped dramatically.

The total number of transactions made on Australian lost or stolen cards rose 94 per cent in 2013 to 162,896.

Since November last year, Victoria Police have maintained that data they have compiled shows the explosion in the use of tap and go cards in Australia is to blame for a rise in break-ins and bag snatching to steal contactless cards.

However – after extensive consultation with police – internet security experts, banks and card companies say they don’t agree.

A spokeswoman for MasterCard said an industry working group on contactless payments had compiled data on fraud using tap and go cards.

It said tap and go fraud accounts for “less than 2 per cent of total card fraud”, while contactless transactions have grown by 350 per cent between 2012 and 2013.

“We don’t see that in the statistics and it just doesn’t make sense to us that contactless is the driver of fraud,” said Chris Hamilton, chief executive of APCA. “Yes, contactless cards can be stolen and used for fraud, but they are no more likely to contribute to the fraud statistics than non-contactless.”

Mr Hamilton said the cap on the amount that could be withdrawn automatically limited the value of fraud on tap and go cards.

“You can’t go out and buy a flat screen TV with these cards, for instance” he said. “The proposition that they are driving fraud must derive from a proposition that criminals or fraudsters are targeting these cards, and can’t see that that is likely.”

He also pointed to a similar shift in fraud from card skimming to card theft in the UK when chip cards were brought in there. Unlike Australia, though, contactless cards were not brought in at the same time.

“Our suspicions are that it is more to do with the fact that counterfeit card skimming is under control,” he said.

Fraud from details skimmed from cards and used on counterfeit cards has fallen by 33 per cent since 2008, although it was unchanged at $37.2 million between 2012 and 2013.

Pat Boyle, Victoria Police’s head of fraud, told The Australian Financial Review earlier in June that he would review new contactless fraud data that banks are compiling.

“We need to build up trust and I need to build up knowledge, so I am confident I have the right information when I brief people,” ­he said.

Mr Hamilton said the main focus needs to be on online fraud because it is growing and accounts for the greatest amount. He said banks, merchants and individuals all had a responsibility and an interest in reducing fraud.

Alastair MacGibbon, Director of the Centre for Internet Safety at the University of Canberra, said business and individuals need to do more to detect fraud and secure credentials.“We need to secure our computers more, and importantly businesses need to be using better fraud detection technology to see if they are using stolen cards,” he said. He said the technology is readily available to do this.

“Businesses do need to develop their skill sets for online fraud. [They] are losing money through this type of fraud.”