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Brussels, 19th February 2001

Payment systems: Commission unveils plans to tackle payment card fraud and counterfeiting

The European Commission has launched a three-year Action Plan designed to crack down on the growing problem of fraud and counterfeiting on cards and other non-cash means of payment widely used for cross-border transactions. Such fraud currently amounts to an estimated € 600 million a year in the European Union (approximately 0.07% of the industry's turnover). Last year fraud grew by approximately 50% and a large proportion of that increase concerned payments made by phone or across the Internet. Fraud undermines the effectiveness of the EU Internal Market, reduces public confidence in cross-border payment systems and threatens the successful development of electronic commerce. EU Heads of State and Government have repeatedly called for action, most recently at the March 2000 Lisbon Council. Tackling the problem is principally the responsibility of the payment systems industry and will depend largely on non-legislative measures but the European Commission can play a useful role in establishing systems to ensure better information exchange, stronger cross-border co-operation on co-ordinated preventative measures, and clear and binding rules with adequate sanctions for those found to break them. The Commission, working closely with the payments industry, Member State legislators and regulators and consumer groups, intends to use the Action Plan to foster a coherent, global approach to crime prevention.

Internal Market Commissioner Frits Bolkestein said: "The rate of increase in fraud and counterfeiting of payment cards concerns us all. To date the counter-attack has mainly focussed on domestic payments, but the scale of cross-border fraud means we need urgent action at a European and, indeed, international level. This Action Plan sets out a framework for better co-operation and co-ordination. Criminals commonly use sophisticated techniques to commit fraud and counterfeiting. They have repeatedly shown their ability to exploit any weak link in the chain. We must work together to beat them at their own game."

The Action Plan was drafted in consultation with the payment card industry, national authorities, retailers, network operators and consumer groups and will run initially until the end of 2003, when the Commission will report on progress achieved and propose further action as necessary.

Central to it is the need for improved consultation and co-operation and through the Plan the Commission will establish an experts' group at EU level and set up mechanisms to ensure that those responsible for national and EU payments schemes as well as banks, banking associations, equipment manufacturers, Europol, Interpol, public authorities, law enforcement agencies, retailers, consumers and network operators meet regularly.

The plan's objectives cover five main areas:

  • Technological improvements

  • Improved information exchange

  • Better educational material and co-operation, new training programmes

  • Specific fraud prevention measures

  • Improved co-operation with non-EU countries

  • It includes such measures as:

  • The introduction of a single phone number, operational in all EU Member States (or at least a single phone number for all issuers based in each Member State) so as to make it easier for consumers to notify the loss or theft of their cards.

  • The publication by the Commission, in co-operation with national data protection authorities, of guidelines on conditions for exchange of information related to fraud prevention.

  • The setting-up of an EU-wide fraud prevention website with information on initiatives and links to all relevant organisations.

  • The introduction of specific initiatives to improve security of payment products and systems based on the findings of a Commission study on specific security aspects

  • To encourage the payment industry and law enforcement agencies to agree on what key items of evidence are needed to investigate and prosecute fraud cases and on a common format for the exchange of relevant information.

This framework of preventive measures must be applied globally. While preventive measures are introduced in the European Union, action will be taken to prevent criminals from affecting the interests of the European Union by relocating their activities in third countries. Co-operation in preventing fraud in this area will be pursued with authorities of third countries and in international fora.

The full text of the Communication and Action Plan is available on the Europa Internet site: (click on What's New).

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