Online credit card fraud on the rise leading up to holiday season

Analysis from AusPayNet serves as a reminder for consumers and merchants to be vigilant online this holiday season, with research indicating a significant increase in credit card fraud.

The new data shows a 9.2% rise in fraud on payment card transactions in the 12 months to 30 June 2021 (FY21) alongside increased online spending during COVID-19 lockdowns.

Overall, the total spending on cards rose 5.4% to $847.3 billion during this same period, with the fraud rate being 57.8 cents per AUD$1,000 spent.

Card-not-present (CNP) fraud, which mainly occurred via online transactions, rose 12.3% to $442.0 million, notably due to a spike in online commerce during COVID-19 lockdowns in various parts of the country. CNP fraud accounted for 90% of all fraud on Australian cards, signaling it as one of the most effective entry points for scammers.

While digital and cyber fraud with cards increased, physical card fraud saw a decline.
Lost-and-stolen card fraud dropped 9.2% to $28.0 million, and counterfeit/skimming fraud fell 37.3% to $8.9 million.

This highlights the increasing downwards trend shown in data, as criminals look to the internet to find card targets.

AusPayNet CEO Andy White says rising eCommerce volumes underscored the need for industry coordination to target the activities of fraudsters.

"Online transactions continue to grow strongly and inevitably this attracts the attention of organised fraud groups. Industry-wide efforts to mitigate CNP fraud will remain critical, but we all need to remain vigilant when transacting online."

White says the industry's new CNP Fraud Mitigation Framework is slowly showing its effects, but the full effects are still to come.

"We expect to see the full benefit of the CNP framework as we emerge from the pandemic."

The framework encourages businesses to utilise secure technologies such as real-time monitoring, machine learning and tokenisation, to prevent consumers and companies from getting caught out. Merchants who consistently exceed agreed fraud threshold targets are required to introduce strong customer authentication.

Release of the latest payments fraud data comes soon after AusPayNet's Economic Crime Forum (ECF). This new initiative is the successor to the Fraud in Banking Forum, and brings together industry stakeholders to coordinate joint responses to economic crime, including scams, fraud, financial crime on and offline.

White says he and his team are prepared to tackle the challenges ahead and look out for consumers as shopping climates start to re-open.

"Alongside our focus on CNP fraud, last month we launched our scams strategy. Over the coming year we look forward to working with industry to reduce the impact of scams on vulnerable businesses and individuals."

AusPayNet suggests some simple ways consumers and merchants can keep themselves safe from card fraud.

For consumers:

• Only provide card details on secure and trusted websites. Try looking for the locked padlock icon.
• Treat unsolicited emails and text messages from unknown people with caution.
• Regularly check statements and immediately report any unusual transactions to a financial institution.
• Use and register for financial institutions' online fraud prevention solutions whenever prompted.
• Undertake checks to ensure the online business being used is legitimate.
• Always keep PC security software up-to-date and do full scans regularly.

For merchants:

• Use tools that help authenticate customers.
• Investing in tokenisation also helps prevent card fraud. 

The company also suggests regularly speaking to acquirer and gateway providers about ways to secure a business.