UK payment fraud: the devil is in your details! #capuk

Stephen Harrison (photo), Chief Executive , Nation Fraud Authority (NFA) delivered a presentation on June 28 regarding the importance of fraud in advanced payment methods in the UK at the marketforce future of cards & payments conference:

the National Fraud Authority was set up by a response to fraud by the UK Government in 2006 in order to understand fraud risks and develop partnerships to counter it. the NFA is part of the Home Office. The idea is to get a better handle on the reasons and the extent of fraud. NFA came with the annual fraud indicator indicator in 2012. Here are some of the metrics taken out of the report:

• £73 billion fraud loss
• £20.3 in the public sector
• £6.1 for individuals
• £45.5 in the private sector

“We are also talking of personal tragedies with people who have lost their life’s savings” Harrison added, “it’s not just an economical problem”. Focusing on the private sector (£45.5 billion). Payment frauds had impacted 71% of victims. The not for profit sector has lost £1.1 billion only and 43% of respondents had been victims.

Online banking fraud remains quite low and falling though. Plastic card fraud is by far the biggest, a little below £350 m in 2011 falling slightly from 2010 (see picure above). “It’s not always the case that the Banks are refunding individuals and there are cases in which there is a huge impact on individual users” Harrison said. Yet, whether it’s due to complacency or lack of education (or both), many consumers aren’t really protected from fraud.

how to make consumers part of the solution?

“It’s about changing behaviours” Harrison said, and the NFA is trying to work with the private sector. The “Devil’s in your details” campaign funded jointly with telecom operators. Here are 2 examples taken from the NFA Youtube channel.

phone payment

online payment

NFA didn’t have the budget for a TV commercial and using the Internet and Youtube was cost effective: “it cost only £0.068 per person who saw the add” Stephen Harrison said.

After Stephen Harrison’s presentation, there was a panel with Karen Tyler, Head of Fraud at Santander and Debbie Strickland, function leader, Cooperative financial services. Here are some of my notes during that panel:

• social engineering is one of the essence in fraud, with fraudsters using existing technologies and even traditional means of communications to steal money from individuals
• Santander is worries about the way that things are happening
• Debbie Strickland confirms  that there is an increasing issue about new modes of payment and education is the solution.
• Mobile payments is clearly seen as the future threat even though in terms of amounts, mobile isn’t really on the radar yet.
• A lot of people have gotten used to the tokens, Karen Tyler said, but there are also concerns as to how this will be used by consumers with the new forms of payment and mostly mobile-based.

e-payments in the 21st century

On October 2nd, I gave a lecture on electronic payments in front of the MBA e-business students of the Paris graduate School of management as the opening session of the 2007-2008 school year. In this lecture, I was able to go back to the genesis or Internet banking (I was lucky enough to be part of this in the UK in the middle of the 1990s). From this experience I derived a number of consequences on how security is or isn’t important with regard to the development of e-business, and then drew a parallel with payment systems and the way that they are used in the context of modern day e-commerce. In part two, I described my three-pronged analysis of electronic payments.

 

 

Firstly, the human perspective with a focus on the way that payments are used, including a thorough statistical analysis of the various discrepancies between e-payment usage in Europe and the United States. I also made a comparison with the way that these payment systems are used outside the Internet and how they shape usage and configure the e-commerce landscape in all these respective geographies.

Secondly, the description of the various means of payment, with a particular focus on debit and credit cards, be they virtual or real, and a host of micro-payment solutions such as Internet + (a revolutionary micro-payment system invented and developed by an Israeli/French company at the end of the 1990s), of which I was the first client in this country.

Lastly, the security component was described in details, not only through its most common (phishing, pharming and key logging), but also and mainly through the detailed comparison of official statistics regarding fraud on other payments on and offline.

The duration of this conference was 1 1/2 hour.

• read the full presentation in html format, complete with comments and notes