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Payment fraud continues to decline

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Payment fraud also fell sharply over the past six months, declining by 34% compared with the second half of last year. This continues the downward trend of the past two years. Total losses in the first half of 2014 amounted to approximately €9.5 million.

For the whole of 2013, fraud losses still amounted to €33.3 million, compared with as much as €81.8 million in 2012.

The two traditionally largest categories of payment fraud, online banking fraud and debit card skimming, both fell sharply in the first half of 2014 compared with the second half of 2013, by 54% and 28% respectively. Losses caused by skimming amounted to €38.9 million in the peak year of 2011. Very little now remains: €640,000 in the first half of this year.

Preventive blocking

The decline in online banking fraud is due to banks becoming increasingly effective at detecting and preventing fraud and attempted fraud at an early stage. Another effective measure is the preventive blocking of foreign transfers within online banking.

Phishing and malware

Most online banking losses were caused by phishing: €1.7 million. This was a 47% decrease in the first half of 2014 compared with the second half of 2013. Losses caused by malware also fell sharply, by 77%, to €380,000. Given the continuing nuisance caused by phishing emails, banks are working with authorities such as the NCSC (in Dutch)(opens in new window) to take phishing websites offline.

EMV debit card payments

Since the first half of 2012, losses caused by skimming, in which the magnetic stripe on a debit card is copied, have steadily declined. The losses in the first half of this year involved around 1,000 skimmed cards. The introduction of EMV chip payments instead of magnetic-stripe payments has made skimming possible only to a very limited extent. Since early 2012, it has also in principle been impossible to withdraw cash with skimmed cards in Europe.

Geoblocking

Much of the decline in skimming losses over the past year can be attributed to geoblocking: disabling the magnetic stripe by default outside Europe. Since last year, losses have occurred almost exclusively when Dutch cards were skimmed in countries that had not adopted EMV, followed immediately by cash withdrawals.

Despite these positive developments, banks continue to face a persistently high threat of online banking fraud. ‘Shoulder surfing’ also occurs: criminals observe a PIN being entered and then steal the card. Effective collective and individual guidance for customers on secure online and other banking therefore remains important. The banks’ joint ‘Hang up! Click away! Call your bank!’ campaign (in Dutch)(opens in new window) will be repeated this year and supplemented by two radio advertisements. Banks will also continue to work with the police and the Public Prosecution Service to combat fraud.

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