Online fraud fastest-growing in Europe

Online scams are now the fastest-growing category of fraud in Europe, according to the European Commission.

Card fraud in the European Union is estimated at more than €1bn (£688m) a year. The single most significant component is counterfeit fraud, followed by card-not-present fraud, most of which is conducted online.

‘Card not present fraud is the fastest-growing, while overall fraud is stabilising. Online fraud accounts for 70 per cent of card- not-present fraud,’ said Sebastiano Tiné, administrator in the Commission’s Directorate General Internal Market, speaking at this week’s European Plastic Card and Online Fraud conference.

New research from the Financial Services Authority (FSA) shows that consumer confidence in UK internet banking is fragile, with half of active internet users very or extremely concerned about the potential fraud risk.

The report found that if banks were to tackle fraud losses by shifting liability to the consumer, more than three-quarters (77 per cent) of users would abandon internet banking.

‘If consumers were asked to foot the bill for internet banking fraud losses, our research shows they would stop using the tool,’ said Philip Robinson, financial crime sector lead at the FSA.

Malcolm French, senior fraud consultant at Nationwide Building Society, says the increased attention that the FSA is paying to fraud is having an effect on attitudes in the industry.

‘The past 18 to 24 months have seen a great focus from the FSA on fraud, which has made a lot of senior people sit up and take notice,’ he said. ‘Card-not-present fraud is the biggest category in the UK and it shows the direction in which things are going.’

The financial services industry recently approved a standard for a device able to physically authenticate online and telephone-based transactions (Computing, 5 January). The aim is to provide a device that allows people to use their PINs to secure transactions when banking online, and which could eventually be used for buying goods over the internet.

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