Contactless Fraud overtakes cheque scams for the first time


#1

Even if some people stubbornly refuse to let cheques die, one group is embracing the new technology.


(Peter Roberts) #2

It’s the banks that would lose out if more fraud happens if they raise the limit… So… If they’re willing to raise the limit they are obviously happy with the level of risk. Something doesn’t make sense here, FUD article?


(Allie) #3

Of course it’s a FUD article. Contactless fraud is incredibly rare, and cheque fraud is getting harder due to the sheer lack of cheques and ease of catching it.

Better title ‘incredibly rare form of fraud slightly more common than fraud with ancient and nearly discontinued system’.

Now, as a percentage of transactions being fraudulent, I’d bet cheques are orders of magnitude higher than contactless…


(Peter Roberts) #4

The article mentions stealing card details by contactless as well. Is that even possible? Would that have to be contactless magstripe?


(Allie) #5

It’s possible to get some details (PAN and expiration date) but no merchant should be completing a transaction with just that. You can’t get name, CVC2, etc.


#6

Define incredibly rare.

Theft of card and use of contactless is not uncommon.


(Allie) #7

A fraction of a percent of transactions. Low enough it’s easily covered by interchange as a cost of doing business.


(Simon) #8

Is there not two different issues here?

Copying cards of unsuspecting victims with a card reader I believe is incredibly rare although simply stealing cards and using the contactless feature to purchase a few £30 items before it gets blocked must be pretty common. Some numbers would be interesting


#9

Yes

In 2017 the BBC quoted contactless fraud was 2.7% of contactless spending. But they can’t do maths. It was actually 0.027% ( BBC News )


(Allie) #10

Exactly, if it was 2.7% banks would quit issuing the things. 0.027% vs interchange at 0.2%-0.3% - it’s a manageable risk and should improve with online-first cards.

Oh, and you are the one who said ‘not uncommon’ above. I’d consider 0.027% rather uncommon, rare… even incredibly rare. Obviously if you work in a bank’s fraud department you’ll see it every day. But in the general population, it’s incredibly rare.

Impossible, actually. You can get some data off the card which might be usable for a pre-play contactless magstripe purchase (one) or for some very insecure CNP merchant who only asks card number and expiration. But you can’t copy the card, you can’t make a working clone.


#11

Loss and theft of bank cards is not uncommon. £7m lost to contactless fraud in 2016. I dare say that figure is probably higher now.

Depends whether you wish to talk percentages (of very large numbers) or actual sums involved.

I spoke to a victim of fraud last week who’d lost £780ish to contactless fraud (although was reimbursed by the bank).

On that basis, Contactless is safer than cash.


(Simon) #12

Thanks for the correction.

So since copying the card doesn’t work. And I believe just wandering around town with a card reader charging people £30 at a time doesn’t really work either since this would be easily traceable, these figures must be stolen cards that are used in order to purchase goods for resale.
Doesn’t seem like a very effective scam…


(Allie) #13

Exactly… they got their money back, which cash… nope.

Almost entirely, yes. There are some trivial amounts of pre-play contactless magstripe fraud starting to show up since contactless is getting more popular in the US on terminals, but almost none of them are EMV-mode.


(Tony Hoyle) #14

You could just read it as “Cheque fraud falls below contactless for the first time, because so few cheques are being used”

As far as the quote “Bank of England’s chief cashier Victoria Cleland, she had heard instances of money being “taken off contactless when you walk past something”” I really hope that was the reporter making stuff up (It’s probably possible in some way, but I can’t see it happening by accident and not a risk I’d expect a BoE spokesman to be highlighting).


(Allie) #15

Also, I forgot to reply to this part. I want to talk percentages, because they’re the only thing that’s actually relevant. Obviously, in terms of sums, even rare fraud will be huge sums on an incredibly popular payment system. The percentage, though - the only thing that really matters - sits well below interchange (which, among other things, is intended to cover the cost of fraud losses the bank is liable for).

What are the sums of stolen cash each year, to compare? And what percentage of that is returned to the owner (nearly zero… whereas only gross negligence will cause you to lose out for lost/stolen card fraud…).


(Gareth) #17

You steal the card and resell it to mules - 10 contactless cards, only £150; they go out and spend the money


(Allie) #18

Thankfully, online priority is going to help this so much! You’ll have to be much quicker to use the card.


(Kevyn) #19

Not to point out that there was 405 million cheques used as payments and to acquire cash across the UK in 2017. Hardly a sheer lack of cheques!


(Allie) #20

A bit under five per person. I can easily make that many contactless transactions in a day.

That said I’m still shocked it’s anywhere near five per person. I’ve been getting a bit under one a year. So some people must be using them weekly!

Maybe what we need is a tax on cheques like Ireland has? Don’t get me wrong - I definitely wouldn’t want to see their debit and credit card taxes those are absurd. But a cheque tax would cause people to realise the real cost to society of using cheques.


(Kevyn) #21

I guess I just come from a part of the country I see cheques a lot used to pay trades people or for my employer (a school) so when people state cheques are going the way of the dodo, I point it out :smile: .

The Cheque and Credit Clearing Company gives the following about cheque use:

87% of charities said they had either made or received a payment by cheque in the past month
53% of charities said they receive donation income by cheque
29% of charities said they receive over half their donation income by cheque
75% of UK businesses said that they had either made or received a payment by cheque in the past month
55% of UK personal account holders said that they had either made or received a payment by cheque in the past year

I remember they tried to phase out cheques a few years back but they backtracked. You are right, if banks charged the actual costs of clearing a cheque (or were taxed), however small it was, might start making people use other options.