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Friday, 04 December 2020 10:07

Rates of fraud for merchant customers decline, says CBA Featured


There has been a marked reduction in the level of fraud experienced by its merchant customers, according to the Commonwealth Bank, but despite the drop the bank has warned that small businesses must remain extra vigilant over the festive season.

The CBA reports that over the last year, the rate of fraud committed against merchant customers has fallen by more than 15%, from 55.9 cents per $1,000 for the April to June quarter in 2019, to 47.3 cents per $1,000 for the same period in 2020.

And the bank notes that this trend is supported by recent data from the industry body Australian Payments Network (AusPayNet), which shows overall card fraud fell from $528.8 million in FY19 to $447.2 million in FY20.

The CBA also says the drop has come despite a significant increase in the volume and value of online payments since the beginning of the COVID-19 pandemic earlier this year.

According to the bank’s report, recent consumer spend data for CommBank credit and debit cards show total online spend is up in excess of 20 per cent over August to October 2020, compared to the same period last year.

The data also shows online spend across retail merchants is up close to 100% compared to last year, andwith more people staying at home, online spending on household retail goods – including furniture and appliances – experienced strong growth in 2020, as CBA customers spent more online to enhance their home offices and living spaces.

CBA’s General Manager of Merchant Solutions, Sam Itzcovitz, said the reduction in fraud is very encouraging but warned against complacency.

“It’s promising to see fraud rates decline, but we know all businesses are still susceptible to fraud in this increasingly online world. It’s going to be a busy shopping season for many of our small business customers, and possibly a bit of a learning curve for those who accelerated their transition to online payments this past year,” he said.

“Merchants need to transition online smartly, and this means safely and securely. Fraud protection is an essential part of running a business online, over the phone or in-store.

“It’s particularly important for small businesses, as they may be unable to easily weather the consequences of fraud, such as data and network recovery costs, fines, and reputational damage.

“We encourage all small businesses to ensure they have the right fraud protections in place to be able to have a very merry sales season.”

According to the CBA, one of the leading types of merchant fraud involves Card Not Present transactions, where a fraud is committed without the actual card – for example, when someone uses stolen card details to make a purchase online or over the phone.

“According to AusPayNet, Card Not Present Fraud accounted for 87.7% of all card fraud in the 12 months to 30 June 2020. Other prominent types of merchant fraud include account takeovers, first party disputes where the cardholder reports fraud when they actually did authorise the transaction, and scams directly targeting the merchant,” Itzcovitz says.

“These sorts of scams against merchants can be hard to spot, so it’s important merchants take the time to understand how they could potentially be defrauded, and what they should do to reduce that risk.”

The CBA has a list of tips for businesses to protect their business during the festive season - and all year round:

  1. Educate your staff about fraud – this could include guidance on password security or email payment fraud. Check out CBA’s free cyber security eLearning for business owners and their staff.
  2. Not all transactions are created equal – Understand the risks of different types of transactions. The way your business processes and accepts a transaction can carry a higher level of risk than others. Remember that you are liable for manually keyed transactions.
  3. Learn how to spot refund fraud – knowing some of the warning signs and establishing processes around refund fraud is key to protecting your business. This can include allowing only a small group of staff to process high value refunds and always double check the original transaction card or receipts to ensure refunds are only processed to the purchasing card.
  4. Remain vigilant with in-store transactions – When taking a payment in store, there are a few steps you and your employees should take to ensure the card and owner are genuine, and that your payment terminal is secure. For example, always maintain control of your terminal to ensure a customer is not changing the transaction or manually keying in a stolen card number.

For more information on the CBA's merchant security measures, click here.

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