Matters found that around 26% fell victim to card fraudsters in 2008, up five per cent on the previous year.
Kerry D'Souza, card fraud expert, CPP, says: "The dramatic increase in card fraud shows no sign of abating which isn't surprising given the desperate measures some people will resort to during the recession."
The average sum fraudulently transacted is over £650, with one in 20 victims reporting losses of over £2000. Yet 42% of victims did not know about these transactions and only found out they had been defrauded when alerted by their bank.
Online fraud affected 39% of victims, while card cloning from a cash point or chip and pin device accounted for a fifth of cases. Out of all cards that are physically lost and stolen, one in ten are also being used fraudulently.
One in 4 sounds quite high. That's a lot higher than one would expect. So either fraud has been running high and only now are better figures available, or it is growing? They say it is growing.
The economist J.K Gailbraith used the term "bezzle" to denote the amount of money siphoned (or "embezzled") from the system. In good times, he remarked, the bezzle rises sharply, because everyone feels good and nobody notices. "In [economic] depression, all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks." [Galbraith, The Great Crash 1929]
If this is true, then likely people will be waking up and demanding more from the payments infrastructure. No more easy money for them. Signs of this were spotted by Lynn:
"Up to this point, there has been no information sharing, thus empowering cyber criminals to use the same or slightly modified techniques over and over again. I believe that had we known the details about previous intrusions, we might have found and prevented the problem we learned of last week."
Heartland's goal is to turn this event into something positive for the public, the financial institutions which issue credit/debit cards and payments processors.
Carr concluded, "Just as the Tylenol(R) crisis engendered a whole new packaging standard, our aspiration is to use this recent breach incident to help the payments industry find ways to protect its data - and therefore businesses and consumers - much more effectively."
For the past year, Carr has been a strong advocate for industry adoption of end-to-end encryption - which protects data at rest as well as data in motion - as an improved and safer standard of payments security. While he believes this technology does not wholly exist on any payments platform today, Heartland has been working to develop this solution and is more committed than ever to deploying it as quickly as possible.
Now, if you've read Lynn's rants on naked transactions, you will know exactly what this person is asking for. And you might even have a fair stab at why the payment providers denied Heartland that protection.Posted by iang at January 30, 2009 05:48 AM | TrackBack