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EU organized crime makes €1.5 billion a year on credit card fraud

The EU should take new measures to address payment card fraud, a new report says

Organized crime groups in Europe make about ¬1.5 billion (US$2 billion) a year from payment card fraud, according to a new report from the European Police Office (Europol).

Payment card fraud is "dominated by well structured and globally active organized crime groups," said the Europol report, released Monday. Payment card fraud is a "low risk and highly profitable criminal activity," the report said.

The European Union should allow Europol to work more cooperatively with non-European countries on credit card fraud investigations, the report recommended.

Difficulties with international investigations, plus a reliance on private industry to cover credit card fraud losses, "leads to the dangerous situation" in which illegal income that goes to organized crime groups is not identified and recovered, the report said. "It seems that the E.U. response to the payment card fraud problem is not harmonized or fully supported by all actors -- card schemes, card issues, processing centres, law enforcement agencies and judicial authorities," the report said.

The report called payment card data the "ideal illicit Internet community" because it is easily sold. Organized crime groups use stolen card data to purchase goods and services online, the report said.

Most of the credit card numbers misused in the E.U. have come from U.S. data breaches, the report said. "However, since, 2010, Europol have observed a growing number of financial data breaches against E.U.-based merchants and card processing centres," it added.

Europol's investigations into online credit card fraud focus on the illegal purchase of high-value products, networks of so-called mules set to receive stolen goods ordered online, and illegal purchases from travel services and airlines, the report said.

The E.U. should also promote the EMV (Europay, MasterCard and Visa) standard for integrated circuit cards as a safety measure, and in the meantime, should consider blocking overseas transactions using E.U.-issued cards unless users have activated them in advance, the report recommended. Chip-embedded cards have several security protections, the report said.

Blocking overseas transactions, called geoblocking, may be effective because a majority of illegal face-to-face, card skimming, transactions involving E.U. cards take place outside Europe, primarily in the U.S., the report said. Geoblocking is "less convenient" for card holders but may still have significant support, the report said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is [email protected]


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