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As counterfeit card fraud falls in Europe, online fraud rises

February 25, 2014

In 2012, card fraud within the single euro payments area increased for the first time since 2008, driven mainly by growth in Internet fraud, according to the European Central Bank. Today, the bank issued its third report on card fraud and called for stronger online security within SEPA.

In 2012 the rate of debit and credit card fraud within SEPA (the EU, Iceland, Liechtenstein, Monaco, Norway and Switzerland) was 0.038 percent, compared with 0.036 percent in 2011. 

The total value of fraud increased by 14.8 percent in 2012 compared with 2011, reaching 1.33 billion euros ($1.78 billion). Compared with 2008, the overall amount of fraud decreased by 9.3 percent, but the value of transactions increased by 17 percent (see chart).

"These data show we must remain vigilant against card fraud, although it is also reassuring to see that counterfeit levels are lower inside SEPA than outside, thanks to higher security standards," said ECB VP Vítor Constâncio.

The report, compiled by the Eurosystem (the ECB and the 18 national central banks of the euro area), looks at fraud by type of card (debit or credit) and according to type of use.

In 2012 some 60 percent of the value of fraud resulted from card-not-present transactions via mail, telephone or the Internet — while roughly 25 percent resulted from POS terminals and about 15 percent from ATMs.

Available data on regular CNP transactions suggest that CNP payments rose by around 15 percent to 20 percent per year between 2008 and 2012, compared with 4 percent a year for all transactions, including ATM and POS transactions.

Against this background, the European Forum for the Security of Retail Payments emphasized the need for higher security standards in its recommendations for the security of Internet payments released in January 2013. Among other things, higher security standards are needed in order to protect the initiation of Internet payments by strong customer authentication, to better protect data storage and communication, and to provide guidance to customers on best online security practices.

The ECB report also showed that counterfeit card fraud continues to shift to countries outside SEPA owing to higher security standards within the SEPA area. In 2012, 94 percent of ATM and 65 percent of POS counterfeit losses were incurred outside SEPA, rising from 53 percent and 58 percent respectively in 2008.

This situation should improve as more countries migrate to the EMV security standard, the report said.

The full report is available at the ECB website.