Data breaches in the United States are responsible for most of the credit card fraud affecting the European Union (EU), according to a recent law enforcement report.
Such fraud is a highly lucrative market for cyber thieves. In fact, criminals are earning an estimated $2 billion a year from the fraud, Europol said.
Almost all of the fraud with EU cards during 2011 took place in nations which are not part of the European Union. The EU suggested that part of the blame comes from the fact that the chip and PIN security used in the EU has not made its way on cards worldwide, according to Europol.
"So far most of the credit card numbers misused in the EU have come from data breaches in the US," Europol said in a statement.
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Brazil, Colombia, the Dominican Republic, Mexico and Russia are among the other nations where such EU-related incidents are taking place. Also, most illegal face-to-face transactions with EU-issued cards took place in the United States.
The fraud is "dominated by well-structured and globally active organized crime groups," the Europol report added. The groups often use stolen cards to buy goods and services online, the report said.
This week, Europol is starting a new Cybercrime Center located in The Hague. One issue the center may have to address is that data thefts involving the Internet “usually involve huge quantities of personal data, which criminals then sell on the internet,” the BBC reported.
Also, protection is “very expensive and need(s) to be implemented on a global level,” according to the Europol report. “Payment card fraud is a low risk and highly profitable criminal activity.”
Europol backs the use of Chip and PIN protection to reduce payment card fraud. “Cardholders’ confidential data is more secure on a chip-embedded payment card than on a magnetic strip card,” the Europol report explained. “Chip-embedded cards support dynamic authentication, requiring dynamic values for each transaction, and cannot be easily copied. The EMV card is considered to be well protected against skimming.” EMV stands for the Europay, MasterCard (News - Alert) and Visa standard, IDG News explained.
“The ultimate solution to this problem would be to implement the EMV standard on a global level, including making United States’ merchants compliant,” Europol added in the statement. “It is difficult to predict if, and when, the final stage of compliance might be reached.”
Meanwhile, Europol wants to see all European-issued cards be EMV (chip-embedded) only – as an immediate security precaution. Also, Europol wants to cooperate more with non-EU nations on fraud inquiries.
There was a clear drop in the amount of European data fraud, according to a recent study from FICO. “Analysis done on 55 million active credit cards represented in the FICO Falcon Fraud Consortium for Europe showed that counterfeit fraud fell 60 percent between March 2009 and March 2011,” according to TMCnet.
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