Banks told to act on contactless card fraud
Regulator steps in on loophole that allows payments on cancelled cards to continue
Banks and payment card providers have been told they must do more to protect customers against the risk of contactless card fraud.
In particular, the financial regulator is calling for action over a loophole that means "cardholders can be defrauded months after their cards are stolen or lost", says The Times.
Following concerns from the Treasury committee, the Financial Conduct Authority yesterday (FCA) sent a letter setting out a package of remedies.
"In his letter to the committee, the FCA chair, John Griffith-Jones, said it was urging banks to remove 'any onus on customers to identify fraudulent transactions'," says The Guardian.
"It was also considering technical fixes as well as providing customers with more clarity on clearing times for contactless payments."
The issue arises when contactless card transactions are accepted "offline", meaning the bank is not contacted at the point of payment and the charge is processed from the cardholder's accounted in a batch later on.
Because of this - and because some banks do not automatically check these offline transactions - cardholders can be charged long after they report their card lost or stolen.
Treasury committee member Rachel Reeves said: "The security flaws that allow fraudsters to use contactless cards even after they have been cancelled need to be tackled urgently.
"Customers are in the unacceptable situation that they are still vulnerable to fraudulent transactions - despite reporting their cards lost or stolen."
Among measures the FCA said we're already happening to tackle the issue is a move by Visa later this year to ensure all transactions are "online".
"Given Visa's large market share, it [is] likely the move would significantly reduce offline processing of contactless transactions, correspondingly reducing fraud, the letter said," adds the Guardian.
The FCA letter also stated that contactless card fraud accounts for only around 0.5 per cent of card fraud overall in the UK.