Banks in First Data study call for International Co-operation to combat fraud (page 1 of 2)

Fraud experts from 52 banks across the region call for greater co-operation in the fight against fraud while acknowledging the significant barriers that stand in the way of collaboration.

Commissioned by First Data International and carried out by Olive Insight, an independent research firm, the study explores the experiences and opinions of senior fraud experts in relation to ATM, POS, online banking and card not present (CNP) fraud.

Key findings include:

•Fraud is global, learned and progressive.

Ninety six percent of respondents believe that fraud is perpetrated on a global stage, learned and passed from one part of the world to another. This means that the industry has the opportunity to anticipate how those involved in fraud will strike next - and take preventative action in advance of a potential attack.

•Banks feel handcuffed.

Banks' efforts to combat fraud are constrained by concerns about the customer experience and their own competitiveness. As one respondent states: "Organisations are secretive of fraud losses and that inhibits our ability to work together." Data protection legislation is seen by many banks as a significant barrier to industry co-operation, although European data protection experts at a recent First Data forum suggest that the problem lies more in perception and understanding than in the realities of the current legal framework.

•Regulation can be a strait-jacket.

Fifty five percent of respondents believe that regulation helps to combat fraud. Others, especially in Western Europe, are concerned that regulation may prove too restrictive in a rapidly changing environment. Katy Worobec, Head of Fraud Control at APACS, the UK payments association, comments: "Regulation may not allow for the changing face of fraud and may not incorporate the flexibility necessary to meet new developments. Fraud changes and migrates too quickly to have inflexible legislation around it."

•Banks are most concerned about new and emerging frauds.

While ATM and POS frauds are more prevalent - and more expensive - today, online fraud is a real problem across Western Europe and a significant threat elsewhere in the region, where Internet usage is expected to rise. Online banking fraud offers the perpetrator scale efficiencies (the capability to defraud more people, more quickly) and reduced personal risk. Thirty-eight percent of respondents report an increase in phishing attacks and over a third are seeing more online CNP fraud. Cédric Sarazin, Cartes Bancaires, chairman of the European Payments Council's Card Fraud Prevention Task Force, states: "One common trend across all major markets is that CNP transactions are generating more and more fraud. While total fraud is decreasing, we should be very cautious as CNP fraud may well become a much larger problem."

•Technology is a key weapon in the fight against fraud and a clear priority for over 50 percent of respondents.

Many organisations are introducing anti-skimming devices and improving security at ATMs. Innovative ways of analysing data are under review and need further exploration. Link analysis, for example, can help banks to gain a joined-up view of fraud across the organisation while multi-factor authentication promises to reduce the reliance on static data. Banks need to evaluate technology implementation costs in the light of both financial losses from fraud and its impact on consumer confidence.

Jackie Barwell, director of fraud management, Europe, Middle East and Africa, First Data International, comments:

"The fraud experts participating in our study clearly recognize that fraud is a global phenomenon, demanding a global response.