Fraud with non-cash payment methods, such as credit cards, grew 50 percent last year in the European Union member states, according to a European Commission report.
A large proportion of the increase concerns payments by phone and on the Internet. Fraud with non-cash payment methods currently amounts to an estimated 600 million euros (US$552 million), the report said.
In response to the figures, the Commission, the EU's executive arm, on Monday announced an action plan to combat fraud. However, the Commission said, taking on the problem is primarily the responsibility of the payment systems industry. The Commission said it will do its part by providing a platform for information exchange and "clear and binding rules with adequate sanctions for those who break them."
Key to winning the battle, the Commission's Directorate General for the Internal Market found, is an international approach.
"To date the counter-attack has mainly focused on domestic payments, but the scale of cross-border fraud means we need urgent action at a European and, indeed, international level," EU Internal Market Commissioner Frits Bolkestein said in a statement summarizing the report.
The Commission views cyber criminals as a serious threat, saying that criminal activity has "grown rapidly." Also, the report notes, the confidence in the privacy and security of online payments continues to inhibit the growth of electronic commerce.
"Apart from the interception of data in payment transactions the possibility of hackers collecting information out of Web site databases is cause for concern," the report said.
Technology will play an important role in outwitting the challengers. "The introduction of the highest economically viable level of technical security is a prerequisite," the report said, pointing out chip-card technology as an example for securing transactions. The technology should be implemented by mid- 2002 at the latest.
Preventive action remains vital, according to the Commission. Consumers need to understand the risks of using non-cash payment instruments and the best preventive behavior.
The Commission will establish a group on the EU level for those responsible for national and EU payment schemes as well as amongst others banks, equipment manufacturers, law enforcement agencies, and network operators to meet regularly. The results of the action plan will be evaluated in three years.
The European Commission, in Brussels, can be reached at +32-2-299-11-11 or online at http://europa.eu.int/.