Cashless Summer Games, Bountiful Cyber Fraud Opportunities
As the summer games wind down in London, we can expect to see plenty of gold, silver and bronze. What we will not be seeing plenty of is cash. That’s because the games have been deemed “cashless,” utilizing contactless and mobile payments as the norm.
This fact, combined with the influx of potentially nine million visitors, means fraudsters are positioned to make the most of this event by targeting unsuspecting fans. Cyber fraud, such as phishing schemes and false websites offering event tickets and hotel rooms, has also been linked to the summer games.
Although the concept of payment card fraud may sound complicated, it’s relatively low tech. Typically, it involves information capture via malware on a consumer’s computer or a phishing scheme, trapping a card in a machine, skimming the magnetic strip’s information, videoing the PIN number as it’s being entered, or hacking into a network. These schemes are largely possible because magnetic strip technology is old and many visitors to the games will arrive with magnetic stripe cards – not the more sophisticated chip and PIN cards. According to a recent TV documentary, $51.5 million (£33 million) was lost to ATM fraudsters in 2011 in the U.K. alone.
The risks are not limited to ATMs. With the majority of visitors entering London through airports and train stations, self-service payment terminals are prime targets. A potential problem with self-service terminals is that criminals can compromise those terminals and capture magnetic stripe information because they are stand-alone and not under constant supervision.
So how can financial institutions protect themselves and their customers? In the U.K., the more sophisticated chip and PIN technology has already been adopted, and Visa and MasterCard have announced plans to introduce the technology in the United States by 2015. But, the best way to reduce risk is to invest in real-time fraud monitoring. Front-end solutions are not always enough. Transaction monitoring that provides behavioral profiling and pattern recognition can help identify fraudulent activity instantly – thwarting fraudsters’ attempts and thereby reducing financial losses.