Saturday, June 02, 2007

Cellphone remedy for Financial Fraud

This is a picture of an ATM with a card skimming device installed in front of the existing card slot. Very difficult to spot, not so? Recently, Westpac announced that they blocked 900 card accounts of cards that were used at a ATM in Melbourne that was tampered with and where the card information was skimmed. (Read article). All of the cards that could be effected were blocked, but fraudulent transactions were only conducted on 75 cards. The total amount of the fraud amounted to $ 100 000. Westpac also announced in the same press release that they are in the process of installing anti-skimming devices on their ATM's. It has been reported that these devices actually vibrate the card as it is being pushed into the slot, making it impossible to be read by a static device. Three things spring to mind when reading this story:

  • Westpac must be congratulated that they actually tell this story. I often hear banks saying that it would break confidence in the banking industry if cases of fraud were to be reported. I believe that this attitude aggravates the problem. By telling people what can possibly happen, they can be more prepared to fight the fraud and report any suspicious things.

  • Second thing, it does spring to mind that Westpac may be publishing the story to highlight the fact that they might be the only bank in Australia that is installing the vibrating card trick. I was wondering what the cost of this change to all the ATM's is and if this is an indication of the size of skimming fraud in Australia. If this project is being executed with a positive business case, many other skimming incidents must have occurred to make it worth the cost and effort.

  • So is this vibrating card reader the only anti-skimming and anti-fraud mechanism that can be deployed for card fraud, and a related question: Why talk about this on a mobile banking blog?

Fundamo successfully deployed a number of very powerful anti-fraud mechanisms for card systems by making use of the unique characteristics of mobile phones. Solutions provided by Fundamo to combat card-related fraud include transaction alert services delivered to the card-holder's phone, ability to change a card PIN on a phone, or even block the card and mechanisms where the mobile phone is utilised as "something you have" in two factor authentication for transactions performed on the Internet... In addition, most phones can vibrate too (for free).

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