Apple Pay Fraud: Prevention better than a cure for financial services
21st July 2015
So from last week we are now able to buy trolley loads of Percy Pigs from M&S and pay for them all with a mere tap of our phone. Mobile wallets have been on the cards for years, but with the launch of Apple Pay into the UK they are now (or will be once all the banks come on stream) a reality for millions of shoppers making paying quicker and easier than contactless debit and credit cards. Not least because many retailers have chosen to waive the £20 maximum enforced on tap and pay cards.
The stakes are therefore much higher when it comes to fraud. Data from the US, which introduced Apple Pay last October, so far shows that fraud levels are 60 per cent higher than for card payments as it is easy to both use a stolen phone and load stolen cards onto phones – essentially a double fraud whammy.
This means for financial services that fraud checks are going to have to become more stringent or Apple Pay will end up costing the sector billions in reimbursements to fraud victims.
And its not just fraud from stolen phones or uploaded stolen cards that the financial services sector has to worry about; its also the facilitation of existing fraud crimes. For example ID fraud, which already accounts for 41 per cent of all reported fraud crimes according to the latest report from CiFAS. In terms of deceased ID fraud, a subset of this, Apple Pay means that criminal gangs that deal in stealing (and selling) the identities of people that have died, can now not only apply for credit using the identity of someone that has passed away, but can then upload that illegally acquired credit card to Apple Pay. Due to the lack of a maximum limit being set by many stores, this means it will be even easier for fraudsters to rack up credit funded purchases.
To stem the tide of deceased ID fraud, credit providers need to identify fraudsters at the credit application stage, rather than once the credit has been issued. Prevention is, after all, better than a cure.
We offer Halo, a fraud prevention solution, which enables financial services to screen all applications against a list of people that have passed away so that deceased ID fraud can be identified and cut off at the source. For more information please don’t hesitate to give us a call on 01274 538888