Internet fraud increased threefold in 2012

The number of banking card misuse operations in Ukraine is on the rise. The Ukrainian Inter-Banking Association of Payment System Members says the instances of fraud in this sector rose threefold in 2012 compared to 2011.

Cyber fraud is divided into two types that involve: using pay cards and/or their data (e.g., skimming), and using online banking (in other words, in the customer-bank system).

“Last year, 80 readout devices (skimmers) were found in ATMs against 45 in 2011 – a threefold increase. Compare this with Russia, where 2,071 and 397 readout devices were found in 2012 and 2011, respectively, which means a 422-percent growth. In Europe, there is one skimmer per 500 ATMs, in Ukraine 1.5 devices per 10,000 ATMs,” says Olesia Danylchenko, chief of the Inter-Banking Forum for Safe Pay Card Transactions, commenting on one of the favorite ways of stealing money from credit cards. At the same time, she says, the market shows a decline of fraud in shopping and service facilities and, on the contrary, a growing number of online crimes. Danylchenko claims the number of Internet crimes has gone up threefold. “As for the causes of this growth, 70 to 80 percent of data leakage occurs via the customers’ antivirus software. Banks are doing explanatory work now: the card is a safe tool, but using software in the computer may involve risks,” she says.

According to Leonid Tymchenko, Deputy Chief of the Cyber Crime Department of the Interior Ministry, the other type of crimes (in the customer-bank system) is also on the rise: there have been 139 thefts worth a total 116 million hryvnias. “The amount of the money returned to banking cards is more than 87 million hryvnias. In other words, according to the ministry’s information, over 75 percent of the stolen money has been compensated for,” he says.

Experts maintain that the tendency towards stealing money from plastic cards is stronger in the EU than in Ukraine. “The average figure in Europe is 0.06-0.08 percent, or even 0.15 in some countries. In Ukraine, there are 40-45 percent fewer fraudulent operations on the average,” says Oleksandr Karpov, chairman of EMA, the Ukrainian inter-banking association of payment system members, in answer to The Day’s question about statistics. So he concludes that it is much safer to use cards in Ukraine than in Europe because a more progressive Ukrainian banking law obliges banks to exchange information on fraudulent operations. For the banking system to be more responsive and effective and able to forestall this kind of infractions, the Independent Association of Ukrainian Banks (IAUB) is going to conduct a nationwide campaign, Countering Cyber Crime. It is planned, as part of this campaign, to establish a single system of exchanging information on cyber crimes under the auspices of the National Bank of Ukraine. The system will accumulate all the information about this kind of offenses from financial and crediting institutions. It is possible to create, on the basis of this information, data bases with “black lists” of, say, harmful software as well as to work out response instructions. The IAUB is planning, in collaboration with Ukraine’s Interior Ministry, to launch the Anticyber website which will accumulate as much information on cyber crime as possible and be aimed, above all, at the users of financial services.

However, even these measures will not provide a 100-percent guarantee against money theft because banks alone will be unable to keep the funds of a customer safe. Individuals should exercise extreme caution, says Oleh Matata, chief of a bank’s information security department. One should keep an eye on his or her card during the transaction. “I always treat my card as a wallet with money inside. I will never give [my wallet] to the person that services me and say ‘Make payment, please.’ One should treat the card in the same way. Do not give it to somebody and think that the person who took it will no nothing unlawful. To get all the information, one needs to memorize the card details or photograph both sides of it with a cell phone – in that case he or she will acquire the necessary information and perform any online operation,” he says, speaking of the basic safety rules.

To avoid contact with the skimmer, one should, before using the ATM, compare the image of the card reader and the keyboard on the monitor with the actual picture. “If they are identical, you can use your banking card,” Tymchenko says. He also added that there are sometimes anti-skimming holograms in the ATM’s window. They should be compared to what is in the sticker on the ATM’s surface.

Besides, experts say, to keep your e-money safe, do not write the PIN-code on the card or carry a slip of paper with the password together with the card. On coming back from abroad, change your plastic card, change the passwords more often, subscribe to SMS-banking (automated information to the phone from the bank about every withdrawal of money), set a limit to the money being withdrawn from the account – these are the basic rules for plastic card owners, according to experts.

And, finally, card owners are advised to observe another simple rule to avoid “shoulder surfing” when they insert the card’s PIN-code. To find out the PIN-code, today’s miscreants rarely use keyboard overlays – they increasingly use midget video cameras.

“They are usually installed in such a way that if you, when inserting the PIN-code on the keyboard, cover it with your hand of wallet, the frauds will be unable to see the keys you pushed. Sometimes banks put up a blind that keeps the PIN insertion from being spied on, but there is a danger that frauds will attach a video camera on the blind itself. So the most effective instrument to protect your money is your own hands: use one to insert the code and the other to cover the action,” Danylchenko says.

The interviewed experts say that banking card fraud flourishes because the number of cashless transactions is on the rise. A survey conducted by Kaspersky’s Laboratory shows that 55 percent of Ukrainian Internet users prefer to make online purchases today. About 39 percent of those polled daily deal with a banking account on the personal computer, 29 and 17 percent make payments via tablets and smartphones, respectively. Hence, the increase in online operations also provokes frauds to invent the new ways of stealing money from customer’s e-accounts.

The number of banking cards is also increasing. The number of banking card holders in Ukraine grew by 18 percent in the nine months of 2012. What is more, 53.1 percent of the cards (34,821,000) are active – this means that at least one disbursement operation has been done in the past three months. The wallets of Ukrainians are mostly full of debit cards – 27,888,000 (80 percent of the total number), with credit cards being only a fifth of that number (6,933,000). Overall 96.1 percent of the total number of active cards belongs to individuals and the rest to corporate entities.