Cardholder fraud is bigger than ever and creates a compliance headache. We have some tips on how your business should deal with cardholder data to mitigate the risks.
According to half-yearly figures released by the Financial Fraud Action UK (FFA UK), between January - June 2016:
- Financial fraud losses across payment cards, remote banking and cheques came to £399.5 million (of which £321.5 million was lost via payment card fraud)
- £678.7 million of fraud was detected and prevented by banks and card companies over the same period (£475.7 million via payment card fraud)
- E-commerce card fraud came to £156 million, with £49.5 million due to lost or stolen cards
- A total of £28.9 million was lost due to retail face-to-face fraud, excluding contactless payments
Earlier this month, members of a Blackpool-based gang were sentenced, after fraudulently obtaining bank cards to steal over £300,000. Preston Crown Court heard how some gang members posed as genuine account holders to order new debit and credit cards and PINs, which they then managed to intercept in the post.
The fraudulent activity was spotted by Lloyds Bank and Barclays, who flagged it to the Dedicated Card and Payment Crime Unit (DCPCU).
Top tips for protecting cardholder data:
- Keep cardholder data storage to a minimum - only keep data that is required for business, legal or regulatory purposes and make sure that it's kept for a limited time only. Regularly purge data that is no longer needed and dispose of it securely.
- Watch what you store - you must never store magnetic stripe data, CAV2/CVC2/CVV2/CID, or PIN numbers under any circumstances. And, don't store plain copies of credit cards anywhere.
- Use masking to hide sensitive authentication data - the first six and the last four digits are the maximum number of digits you can display. Anything else must be 'masked'. Masking is required for all credit/debit cards and prepaid cards, bank statements, receipts, and emails containing payment details.
- Avoid writing cardholder data down - for example, when taking payment. Key the information directly into payment systems instead.
- Make sure that all sensitive authentication data is rendered unrecoverable - once it's been used.
- Never transmit PINs or other sensitive authentication data without secure encryption - if there's a genuine business need to collect or store cardholder data, then encourage customers and partners to use a secure upload facility for this.
- Follow your firm's established procedures at all times - to protect keys used to secure stored cardholder data against disclosure and misuse (including key-encrypting and data-encrypting keys).
- Change vendor-supplied settings and passwords - you'll be vulnerable to attack if you don't bother removing system default settings or change vendor-supplied passwords. Remove or disable default account settings before installing any payment system.
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