Contactless Payment Scams
Contactless payments through cards are hugely popular within the UK – in fact, they’ve now overtaken chip and pin payments. Contactless payments increased by 30% between June 2017 and June 2018 – and 52% of all shop payments were contactless in July 2018. Overall, there were 7.4bn contactless payments in 2018.
Around 7 in 10 payments in the UK are contactless, and 17% of 25 – 34-year-olds make only one monthly payments using cash – or rely entirely on cards to make payments.
One of the reasons for the increased popularity of using contactless cards is they’re easy and simple to use to pay for a variety of goods. By removing the need for a PIN code, contactless cards do offer a fast and convenient way to pay – however, they may also offer criminals the opportunity to commit fraud.
Below, we look at the facts behind contactless cards, how fraudsters can take advantage and the best ways to avoid becoming a victim of credit card fraud.
How do contactless cards work?
Contactless cards contain both a chip and an antenna that is used to carry out the transaction. When you hold your card on or near a card reader, the retailer’s card reader sends out a signal which is picked up by your card’s antenna. The chip inside your card contains information about your account and by using this information, the card reader can process its payment.
Payments are currently limited to a maximum of £30 (it was previously £20), and are typically used for small retail purchases. There can sometimes be a problem with “card clash” which is when two contactless cards, either payment cards or travel cards like Transport for London’s Oyster Card, both interact with a card reader at the same time.
Contactless payments are also quicker because payments are processed in batches.
How widespread is contactless card fraud?
It may seem like contactless technology allows fraudsters an easy way to access your money without a PIN. Assuming you take precautions to protect your card, the chances of it happening to you are reduced – however, consumers are right to be vigilant as cases of contactless card scams doubled in 2018.
Because contactless payment technology currently limits the value of purchases, the total potential value of fraud involving these cards is reduced. Thieves are always looking for big payouts, which are limited by contactless scams.
However, there’s also been recent research that shows that the £30 maximum spend on contactless cards can be bypassed. Researchers have found that the flaws in the payment system for some contactless cards could potentially allow criminals to steal hundreds of pounds in a single transaction.
The hack the researchers used to “break” the £30 limit uses a device that intercepts the signals between the card and the card reader. It then simultaneously ‘tells’ the card that no verification is needed and the card reader that verification has been provided.
Another purported method that fraudsters use is to actually process payments by standing near someone on a train or in another crowded public place and reading their contactless card through their clothes. However, according to Which? there’s little evidence that this type of fraud is common.
How does Contactless Payments Fraud Happen?
While contactless payments offer convenience, they also present opportunities for fraudulent activities. Understanding the various methods used by fraudsters is essential in mitigating risks associated with contactless transactions.
- Skimming and Cloning
Skimming involves the unauthorized capture of card information using hidden devices installed on payment terminals. Fraudsters can then clone the card or use the stolen information for unauthorized transactions.
- Data Breaches
Data breaches occur when hackers infiltrate payment systems or databases, gaining access to sensitive customer information. This stolen data can be used to perpetrate fraudulent activities, including unauthorized contactless transactions.
- Detecting Contactless Payments Fraud
Detecting fraudulent transactions in real time is crucial for minimizing financial losses and protecting personal information. Implementing robust fraud detection mechanisms can help identify suspicious activities promptly.
- Transaction Monitoring
Utilizing advanced algorithms and machine learning algorithms can aid in monitoring transaction patterns and detecting anomalies indicative of fraudulent behavior. Real-time alerts can be triggered for further investigation and intervention.
- Card Security Features
Modern payment cards are equipped with security features such as dynamic CVV codes and tokenization, enhancing protection against fraudulent transactions. These features add layers of security that make it more challenging for fraudsters to exploit vulnerabilities.
Preventing Contactless Payments Fraud
Prevention is key in combating contactless payment fraud. By implementing proactive measures and best practices, individuals and businesses can significantly reduce the likelihood of falling victim to fraudulent activities.
- Enable Two-Factor Authentication
Enabling two-factor authentication adds an extra layer of security by requiring users to provide additional verification, such as a PIN or biometric data, for completing transactions. This helps mitigate the risk of unauthorized access to payment accounts.
- Regular Security Updates
Staying vigilant and keeping payment devices and software up to date with the latest security patches and updates is crucial for addressing known vulnerabilities and safeguarding against potential threats.
- Understanding Contactless Payments Fraud
Understanding the intricacies of contactless payment fraud empowers individuals and businesses to take proactive steps in protecting themselves against financial losses and identity theft. By staying informed and implementing robust security measures, we can collectively combat fraudulent activities and foster a safer digital ecosystem.
How to avoid and report contactless card fraud?
Contactless card fraud is on the rise; in the first half of 2018, thieves stole more than £8 million from contactless scams.
You can minimize the chances of becoming a victim of contactless fraud by following these steps:
- Don’t keep your cards in easily accessible pockets or bags which will draw pickpockets’ attention.
- Line your wallet or cardholder with tin foil to block scamming devices from reading your card. If you don’t fancy the DIY approach, there are products like RFID readers available that do the same thing.
- Don’t let anyone take your card out of sight while taking a payment – even for just a few seconds. They could be using a skimming device to copy data from your card’s magnetic strip.
- Don’t give your friends your card to make payments – always make sure you’re there for all transactions.
- Ask for a receipt to make sure you were charged the correct amount.
- Keep a close eye on bank statements and your credit report to look for any unusual activity.
- Report any lost or stolen cards as quickly as possible. There is a limit on how many times you can use a contactless card before requiring a PIN, which stops criminals from carrying out a large volume of small transactions of up to £30 each – however, it’s best to not wait for the card to be blocked.
FAQs
How common is contactless payment fraud?
Contactless payment fraud is on the rise, fueled by the increasing adoption of contactless payment technology and the evolving tactics employed by fraudsters.
Can contactless payments be made securely?
Yes, contactless payments can be made securely by implementing best practices such as enabling two-factor authentication and regularly updating security measures.
What should I do if I suspect fraudulent activity on my account?
If you suspect fraudulent activity on your account, promptly notify your bank or financial institution to report the unauthorized transactions and request assistance in resolving the issue.
Are contactless payments more susceptible to fraud than traditional payment methods?
Contactless payments may pose unique security challenges, but with proper safeguards in place, they can be just as secure as traditional payment methods.
How can businesses protect themselves from contactless payment fraud?
Businesses can protect themselves from contactless payment fraud by implementing robust fraud detection mechanisms, training staff on security best practices, and staying informed about emerging threats.
What role does encryption play in securing contactless transactions?
Encryption plays a critical role in securing contactless transactions by encoding sensitive information, making it unreadable to unauthorized parties.
Conclusion
In conclusion, Understanding Contactless Payments Fraud is essential in navigating the evolving landscape of digital transactions. By staying informed, implementing best practices, and leveraging advanced security measures, we can safeguard our financial transactions and protect ourselves from fraudulent activities.
