Last year we witnessed dramatic changes in the way we work, socialise, and consume. For those of us who work in payments, one major change happened rapidly, namely the widespread switch from cash to card or e-wallet payments, particularly contactless payments.
While experts stated that transmission of the COVID-19 virus through notes and coins was minimal, many consumers and retailers decided it was not worth the risk and pivoted to card payments. In the UK , card payments were 75.3% higher in early April 2020, compared to the same period in 2019, while contactless payment limits rose to £45.
Unfortunately, this rapid change has been overshadowed by an increased risk of card fraud and, according to our research, one of last year’s most noticeable trends was the rise in swapped card fraud. Swapped card fraud is the act of stealing a card and then replacing it, so that the victim is unaware that anything is amiss. Usually, the stolen card is replaced by either a counterfeit card or another stolen card.
Interestingly, national lockdowns have created a unique situation where card transactions have increased, but card present transactions have ‘temporarily’ decreased. Current levels of fraud reflect this, however in the consumer market we have yet to see whether swapped card or indeed all card present fraud will rise as restrictions are lifted.
What COVID lockdowns have made noticeable is the rise in this type of fraud for those industries where card present payments are not just the norm, but still a mandatory requirement. Our data shows that the current rise in swapped card fraud has affected industry specific card payments, such as fuel cards, the hardest. This is down to several factors, but one example stands out: truck drivers, for example, have been granted key worker status by many Governments across the world, meaning that fuel card transactions, and therefore fuel card fraud, have continued to grow and have been largely unaffected by lockdowns.
The extensive use of unmanned fuel sites in Northern Europe means these areas are also more susceptible to stolen card fraud – either for collusion with drivers or for vehicle break-ins. Current predictions in the fuel card industry estimate that by the end of 2020 there will be a 364% increase in the dollar value of swapped fuel card fraud cases. By September 2020, there had already been three times as many recorded cases of swapped card fraud, as there had been during the whole of 2019. This is likely due to the decreased presence of staff on site due to lockdowns and reduced staffing, as most of the incidents in 2020 occur during the months where lockdowns were at their most severe globally.
When comparing it to other fraud types, swapped card fraud accounted for just 1% of fuel card fraud losses in 2019. Whereas in 2020 it accounted for close to 10% of the total. Traditional copied and skimmed card fraud reduced in 2020 – due to the increased use of contactless and the reduction in the use of ATM machines1 making it harder to copy or skim the data from a card.
The data is all pointing towards a change in the way fraudsters think and act. This fraud has been allowed to rise because all the advice given on stolen cards is to check whether you physically have the card, check your wallet or purse to make sure it’s still there after you’ve been in a crowded area or an area of concern. This has also been helped along by the unique situation that we are in, where merchants and retailers are advising and utilising card payments more, and the security and advice still needs to improve with it.
For everyday card users, you can prevent being a victim of swapped card fraud by ensuring during payments that your card never leaves your sight. Many instances of this type of fraud can occur, such as if you are paying in a restaurant and the server may need to return to the till – make sure that the card being returned to you is the same as the one you gave them. Similarly, if you are paying at a till and the clerk takes your card behind the counter – or even if the card is dropped out of your sight – the fraudster may have a set of cards hidden in a sock or shoe that they can swap out with. As a customer, make sure that you can identify your card number. Similarly, if you do not want to remember the long number, you can mark your card with a permanent marker when you receive it so you are easily able to identify it.
In the fuel card space, cards can change from driver to driver or vehicle to vehicle, so it is worth always remembering the card you have that day – again by perhaps marking it in a certain way. It is also ill-advised to keep the PIN with the card – these two pieces of information should never be stored in the same place, and if possible, the PIN should not be recorded down at all. It is also best practice to secure the card in a locked glove box, and a locked vehicle – even in a seemingly safe rest area.