Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context

I am pleased to have the opportunity to raise in the House this afternoon this important matter and I thank the Minister of State, Deputy Kathleen Lynch, for being here for the debate. Next week in the House we will discuss extensively the issue of political fraud, and we will read much about it today. I want to focus on a different fraud element which is seeing significant growth with the increase in the use of Internet and on-line purchasing. This specifically concerns card-not-present fraud, commonly known as CNP fraud. This is an increasing problem for Irish companies seeking to remain profitable, to protect jobs, to reach new markets and to grow a business. If a consumer is affected by CNP fraud - often referred to as ATM skimming - as I was this time last year, he or she is entitled to a refund from the bank or credit card company. When my card details were skimmed I got a phone call from the bank to say a suspicious transaction had been identified in Brazil; I was in Ireland and had never been to Brazil and the bank, correctly, stopped the payment.

There are no such protections, however, for retailers. Businesses do not get reimbursed for merchandise sent to fraudulent customers. The payment for these products are often flagged after the event and by this time the items will have been shipped and the retailer is usually left out of pocket. In my case the purchase in Brazil was stopped by the bank but there is no evidence as to whether the criminal activity continued or if the criminal managed to buy other goods.

I acknowledge that the Garda bureau of fraud investigation does excellent work in Ireland on CNP fraud, offering comprehensive prevention advice. However, the feedback I have from a large number of retailers in this country is that the bureau is under-resourced and lacks the equipment to follow up fully when crimes of this nature occur. I understand fully the pressures on An Garda Síochána currently and this is by no means a criticism of the excellent work it does. It is about assisting the Garda and providing the required tools.

Fraudsters are well aware of the points of weakness in the current system and frequently change patterns and delivery addresses to avoid detection. We must strengthen the preventative measures supporting retailers in tackling card fraud. This does not need to be a significant burden on the State and our already overstretched resources. Other countries, including the United States, the UK and most of mainland Europe have introduced what is known as address verification systems. This allows retailers to do a live check to ensure the person using the card knows the address to which the card is registered. This significantly inconveniences criminal elements looking to conduct on-line transactions as it is not enough to simply have the details of a card, as in most circumstances the card address is not readily available from the card. Checks of this nature can support retailers without an undue burdening of either State resources or individual consumers. Items can be still shipped to addresses other than those linked to the card but there are additional checks in place to ensure the transactions are legitimate.

There is a real opportunity to support retailers through the introduction of a similar address verification system for Irish transactions. It is not good enough that we do not have it in this country when so many international competitors throughout Europe, the US and our near neighbours in the UK have it. At a time when the Government is sending out a very strong and important message encouraging businesses to reach out to new markets to grow business, internationalise and export, it is important that we send out a clear message from this House and from the Government that we will do everything possible to support companies, to end fraud and to help firms to be profitable and to create jobs.

Kathleen Lynch (Cork North Central, Labour)
Link to this: Individually | In context

I thank the Deputy for raising this matter, which I am taking on behalf of the Minister for Justice and Equality, Deputy Shatter. It is a fact that much of our daily business is now carried out on-line, whether as a retailer seeking to exploit the vast market that is available on-line or as a consumer seeking best value. We have quickly come to appreciate the many benefits of doing our business on-line but we have also had to become increasingly alert to the pitfalls against which we must protect ourselves, including the risk of stolen identity to effect payment card fraud on-line.

Retailers and card issuers will be particularly alert to this form of fraud and the losses to be borne. That there is neither the presence of the card nor the cardholder, and that a personal identification number is not used, means transactions carried out on-line, generally referred to as card-not-present transactions, clearly present an added risk. The Minister understands that the Irish Payment Card Services Organisation, IPSO, estimates that such fraud now represents more than 64% of all fraud carried out on Irish payment cards.

The Minister is sure the House will appreciate that the issue raised cannot be addressed solely through the apparatus of the criminal justice system. It also requires businesses and industry to take a proactive role in ensuring that the operation of payment services systems are secure and that best practice in doing business on-line is promoted to the greatest extent possible to ensure greater protection. The Garda bureau of fraud investigation, GBFI, for its part, regularly offers crime prevention advice with regard to card-not-present fraud as crime trends in this area demand or necessitate, with information provided to alert retailers, industry and the public in general. In addition, initiatives targeting those involved in this type of criminality are frequently undertaken by GBFI.

The payment card and counterfeit currency unit, PCCCU, at GBFI is the designated national unit with primary responsibility for the investigation of payment card fraud in all its guises. Members of the PCCCU work closely with Europol and other European and international law enforcement agencies in targeting groups involved in this type of criminality. Such exchanges of intelligence assist in the targeting of those engaged in this type of criminal activity across jurisdictions. Nationally, the PCCCU liaises directly with the industry through IPSO and the Irish Banking Federation. The PCCCU also works in close association with the national crime prevention office in raising public awareness and delivering crime prevention advice.

The GBFI, together with the card payments industry, continues to promote the use of security features as outlined by the Deputy, including authentication systems among on-line retailers as a proven tool to reduce both losses and risks to the retailer. In the current economic climate, the effect of losses incurred by retailers through on-line card fraud will be further accentuated. There is an onus on retailers to be proactive in this regard and to ensure they avail of all the security and fraud prevention methods that are available. Although not obligatory, the industry has provided solutions through a number of security features and authentication systems that are available to the business community. The idea of a consumer having to provide an address is a very worthwhile security procedure.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
Link to this: Individually | In context

I thank the Minister of State.

Kathleen Lynch (Cork North Central, Labour)
Link to this: Individually | In context

The rest of the reply will be available to the Deputy.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context

I thank the Minister of State for her comprehensive response which provided a good overview of the excellent cross-agency work that is being done. While I recognise again that good work is being done by business, the banks and the Garda Síochána, we need to take the next step. The Minister of State referred to the White Paper on fraud which is being produced. I would appreciate if she could pass on the feedback I am delivering on behalf of retailers on the issue of the address verification system. We run the risk of making this issue excessively complicated. A simple technique used in the address verification system works in a number of other countries, including among our competitors. I welcome the Minister of State's acknowledgement that any losses experienced by businesses through fraud are even more painful at present because they are fighting for survival and to retain and create jobs. I ask, therefore, that the Department give extensive consideration to the address verification system.

Kathleen Lynch (Cork North Central, Labour)
Link to this: Individually | In context

I agree that we run the risk of making this issue excessively complicated. We are all aware of certain identifiers that are used, for example, prompts to confirm one's address or the maiden name of one's mother. These are simple ways of providing protection. People should note that 64% of fraud now takes place online and they should be extremely careful when using credit cards. I accept that banks have become much more alert about card and identity theft and take a proactive approach to informing customers about fraud. This also needs to be appreciated.