Protecting the connected consumer as fraud rises 6% across Europe
E-commerce is booming, and the number of online-consumers is growing across Europe.
In the UK alone, contactless payments spend reached over £2bn last year using 58 million contactless cards, and online retail sales are predicted to reach over £52bn this year. Europe as a whole has seen a rise of 11.1% – clearly, times are changing.
However, increasing consumer confidence has not only created greater opportunities for companies, it has created greater opportunities for cyber criminals as well. According to report by FICO, card fraud losses rose an average 6% in Europe in 2014, highlighting a growing problem for both financial institutions and consumers as online payments rise. So, what are the reasons behind this increase and what is being done to minimise it?
One issue facing the banking industry is the increase in multiple devices per consumer. In the past, people traditionally had one home PC, whereas now people tend to have a smartphone, tablet, home PC and even a smartwatch. As the number of devices-per-consumer increases, so do the chances of fraud. While 94% of people say that they believe it is their personal responsibility to ensure a safe internet experience, only 44% implement internet security software on new equipment, leaving many exposed to attacks from criminals who want to access their data. Also, a recent investigation by Which? found that fraudsters could steal key data from a contactless card simply by using cheap card scanners so we all have to be vigilant. These are just two examples that illustrate the challenges faced by the online banking industry, as financial service providers like FICO work to keep consumer data safe and prevent cyber-attacks.
To increase data security for consumers, we need to continue the battle against Card Not Present fraud (CNP). Over the last three years, our European Fraud Map has shown that one of the biggest challenges we are facing today is today is CNP fraud, which has grown 24 times since 1998 and now represents 70% of the UK’s fraud losses. There are, however, signs of encouragement. CNP was only £3million higher last year than in 2008, which may sound like a lot but it’s actually an increase of less than 1%. With the percentage growth of fraud losses gradually falling, we are slowly but surely winning this battle. However, the war is not over – we need to raise awareness around the necessity of cyber protection for consumer devices to help fight fraud, ID fraud in particular.
Identity theft has become a weak point for criminals to exploit in this “digital age of banking”, and with consumers using and shopping from multiple devices it is increasingly difficult to identify the person making the payments so criminals try to exploit that. Our challenge now is to make the internet transactions as secure as face-to-face. Developing EU regulations are playing a big part in improving the security protocols for consumers and businesses alike, but financial institutions need to be active in informing customers of the importance of being safe online and protecting their data.
To help minimise the risk of online fraud in the UK, financial institutions need to address cross border fraud too, as fraud is a moving target so quashing it in one place means that it is likely to pop up somewhere else. FICO recently reported a 25% increase in cross-border fraud in the UK compared to 2013, and 47% of that is coming from the US. This is in part due to the US delay in EMV adoption – another issue that’s finally being addressed this year – as cyber criminals are trying to get what they can until EMV closes that door for them. When the US gets fully on board, we will see a vast improvement in cross-border fraud and so become closer to keeping our customer data safe.
We all need to address the changing landscape to be able to keep payment data secure, in Europe and beyond. What other challenges have you observed as we are all ever more connected, living (and paying) online?