IP/04/1291

Brussel, 25 October 2004

Payment systems: Commission sets out new plan to fight fraud

The European Commission has published a new Fraud Prevention Action Plan (FPAP) to fight payment fraud between now and 2007. It aims to increase confidence in non-cash payments – for example those made by credit card and bank transfer - thus encouraging cross-border purchases and boosting e-commerce. The new FPAP builds on its predecessor for 2001-2003 and will complement the Directive on payment services - which the Commission will propose in 2005 - in underpinning a Single Payment Area in the EU (see IP/03/1641, MEMO/03/248) with the ultimate aim of making cross-border payments as convenient, quick and secure as domestic ones.

Internal Market Commissioner Frits Bolkestein said: “Without secure payment systems, you cannot have a modern economy or a functioning Internal Market. In the EU payment fraud is exceeding one billion euros annually. Fraudsters come up with new scams and the payment industry needs to stay one step ahead. That means vigilance and reinforced cooperation within and beyond the EU”.

Priorities in the new FPAP are the security of payment products and systems, co-operation between public authorities and the private sector, the integration of new Member States in the EU fraud prevention framework and closer ties with non-EU countries. It points to emerging threats and urges the rapid EU-wide completion of the changeover to more secure chip cards.

From 2001-2003, under the first FPAP, the growth of payment fraud slowed down, but prevention must be reinforced to maintain momentum against criminal activities such as use of counterfeit cards in cash machines, on-line fraud, data hacking and identity theft.

Action under the new FPAP will include:

• the EU’s Fraud Prevention Expert Group (FPEG) will be streamlined by identifying experts in each sector and/or country as contact points and advocates for its work
• a new FPEG sub-group on user issues will involve the retail sector and consumer associations more closely
• even closer cooperation between the Commission and national authorities to assist the payments industry in making payments more secure
• a Commission study on cardholder verification methods
• the Commission will clarify EU data protection law related to fraud prevention, to allow more effective cross-border information exchanges, and if necessary, the Commission will propose new legislation
• the Commission will encourage best practice: for example, in some Member States, specialised central law enforcement units have been set up against payment fraud
• the Commission will organise, with the payment industry, Europol and other stakeholders, training for specialised law enforcement officers
• the Commission will organise a second conference for senior police officers, magistrates and prosecutors, to raise awareness of payment fraud and its impact
• work will continue on the Commission’s initiative – supported by 94 % of respondents in a consultation (see IP/04/280) - to encourage the payment industry to set up a single phone number in the EU for reporting lost and stolen cards
• the Commission will assess the merits of establishing an EU single contact point on identity theft, for citizens and businesses
• the Commission will promote the creation of a database, for public authorities and the private sector, of original and counterfeit identity documents

The new Action Plan and a report evaluating the earlier one, are at:
http://ec.europa.eu/internal_market/payments/fraud/index_en.htm