New research from the Central Bank shows that the total value of fraudulent payments rose by 26% in 2023, increasing to €126m from €100m in 2022.
But today’s research also reveals that the rate of fraud in Ireland as a share of all transactions is low – by value and by volume the rates are just 0.001%.
The Central Bank said that card payment fraud rate is by far the highest among payment method, with 0.034% of card payments by value being fraudulent.
Online card payments made up 86% of the total value of card fraud in 2023, amounting to €37.4m, while the value of money remittance frauds has more than tripled from €2.5m in 2022 to €8.2m in 2023.
Today’s report shows that about 60% of the total value of fraud across 2022-2023 involved cross border payments, amounting to € 77m in 2023 and €64m in 2022.
It also noted that around half of fraud in electronic payments by value – amounting to €52m in 2023 – were not authenticated via Strong Customer Authentication.
The Central Bank said that fraudulent payments are a growing concern in Europe, especially in the rapidly evolving digital marketplace.
Fraudsters continually adopt new ways to exploit digital systems and bypass security measures, costing businesses and individuals millions each year.
“Combatting fraud in the financial system is a priority for the Central Bank, working closely with law enforcement, other State agencies and peer regulators,” the regulator said.
“Where we identify criminal activity taking place in the financial system, the Central Bank works with An Garda Siochána and other agencies who lead criminal investigations and prosecutions,” it added.
Today’s research shows that around 98% of card payment fraud by value was accounted for by “issuance of payment orders by the fraudster”. which occurs where fraudsters use stolen card, account or personal information for a payment.
The Central Bank said that “Manipulation of the Payer fraud” occurs where a fraudster gains trust by social engineering or impersonation and convince the payer to make payments to them is evident in credit transfers and e-money payment. In fraudulent credit transfers, payer manipulation fraud rose from 27% in the first half of 2022 to 42% by the end of 2023.
The “Unauthorised payment transactions’ category is more specific to direct debits where a fraudster obtains customer information and sets up mandates without the authorisation of the payer.
Over 99% of all fraudulent direct debits were related to such fraud, with an exception in the second half of 2023 due to a once off incident recorded in this category.
The bank also said that “Modification of Payment order by fraudster” is where a fraudster intercepts and modifies a legitimate payment order. It is rare (less than 2 % of all fraud by value) and observed only in credit transfers.
About 60% of the value of fraud is made through credit transfer, although these transactions only accounted for 4% of the total number of fraudulent transactions.
The Central Bank said this is due to the fact that credit transfers are often used for large value payments compared with other payment methods in Ireland. Credit transfer fraud amounted to €70m in 2023, with 24,000 transactions.
Commenting on today’s research, Michael Kavanagh, CEO of the Compliance Institute, said that while the internet and tech are now unavoidable and have brought untold benefits to how we live our lives, they have also brought many dangers.
He said that hackers and cybercriminals are continuously improving their practices, constantly finding new ways of stealing material and outsmarting even the most advanced of security systems.
“The growing sophistication of fraudsters mean scams have become harder to spot, and therefore easier to fall for. Fraudsters are also able to use technology to identify and target people as well as to extract the information they need to steal from someone,” Mr Kavanagh said.
“AI, a technology which has developed at a rapid pace in recent years, is now being increasingly used by scammers in their attempts to defraud people,” he added.
A survey conducted by the Compliance Institute in late 2023 found cybercrime to be the number one threat when it comes to financial crime in Ireland.
Michael Kavanagh said that while financial crimes from tax evasion to insider trading could be classed as the “traditional” criminal pursuits, cybercrime is more new-age and is developing and advancing at a pace so fast that organisations and legislators cannot keep up.
Article Source – Fraudulent payments rise by 26% in 2023 – Central Bank – RTE
