09 April 2008

UK government launches enquiry into card fraud

Steve Gold

The UK government has launched a parliamentary inquiry into the issue of card fraud, which it says has reached near-epidemic proportions.

Heading up the parliamentary inquiry is Labour MP Keith Vaz, who will be looking at how companies can protect themselves against a fraud that is costing firms, card issuers and cardholders more than £500 million pounds every year.

Mike Stannard, director of Navigant Consulting and an expert witness to the inquiry, said that most of the information being traded comes from retailers' hacked databases.
"The government, law enforcement agencies and financial institutions understand what is happening but are constrained in what they can do," he said, adding that internet and telephone card fraud increased by around 37 per cent last year.

The parliamentary inquiry plans come immediately after Finjan revealed the existence of an underground exchange service promoting the sale of fraudulent credit card data with guarantees and volume discounts for large-scale fraudsters.

"The site, which appears to use Google's Blogspot service, is typical of a number of portals promoting the exchange of fraudulent card data. But what is apparent from the SellCVV2 site is the level of sophistication of the traders involved," said Yuval Ben-Itzhak, Finjan's chief technology officer.

According to Ben Itzhak, much of the card data on sale is obviously skimmed from retail point-of-sale terminals and looks to include customer PINs plus the magnetic stripe data - more than enough he says, to create cloned cards with associated PINs, for use at POS terminals and/or cash machines.

The fact that trial card data, guarantees and volume discounts are being offered is, says Ben-Itzhak, symptomatic of the organised criminal gangs who are obviously behind this and other sites that Finjan's research team have discovered.
"If further proof were needed that there is a very serious problem facing the card acceptance and processing industry, this is it," he said.

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