14.01.2025
The Estonian Payment Forum searched for ways of preventing payment fraud
Postitatud:
16.01.2025
The rapid development and increased use of electronic payments and digital purchases in recent years has seen the number of payment frauds jump up substantially. The key to preventing fraud is customer awareness, cooperation between banks and payment service providers, and the European regulations on instant payment, concluded the meeting of the Estonian Payment Forum led by Eesti Pank on 15 January. Frauds are most likely to be encountered in Estonia with cross-border payments, such as purchases from online stores based abroad, but they also occur through phishing emails, fraudulent telephone calls, and other forms of manipulation.
The Estonian Payment Forum agreed that raising public awareness remains critically important, but it is equally important to cooperate efficiently to prevent and resolve payment fraud. Regulatory restrictions would also help in the fight against fraud, as it could for example be much simpler and quicker to block fake websites, or for telecommunications companies to close down numbers used for frauds. The scammers and fraudsters need to be stopped before they can contact their victims, and the next phase after they have taken the money off the victim also needs to be made harder for them. Anybody can fall victim to fraud, but it is commonly believed that the victims are only old people or those who are financially illiterate.
Deputy Governor of Eesti Pank Veiko Tali asked everyone at the forum where they thought the weak points are in the fight against fraud so that joint efforts could be made to strengthen them. “Scammers operate as an industry and it is now too easy for them to get money from people and businesses. We need to work harder together to make life as uncomfortable and difficult as possible for them. We also need to be more agile in adjusting regulations and using digital tools”, he said. The next meeting of the Estonian Payment Forum is planned for spring this year, but in the meantime an action list will be drawn up of the vulnerabilities that can be fixed jointly by the state and private sectors to make life harder for fraudsters.
Head of fraud prevention at the Estonian Banking Association Veiko Kiik said that the key to preventing fraud was for people to become more aware about it. “Simple steps like understanding how authentication devices and PIN codes function, not handing over personal data lightly, and knowing the basics of how fraud schemes work would help people protect their money”, he said.
Head of the Cyber and Economic Crime Division of the North Prefecture of the police Hannes Kelt emphasised that stopping scammers needs cooperation and joint effort between different parties. He also noted that the police have focused more and more on how they can effectively prevent and interrupt complicated criminal schemes that threaten both businesses and individuals. Unfortunately the police hear every day from a number of victims who have lost their savings to frauds. “We should think critically about taking a step back to look at what we have done so far. While technology can be a useful tool for the criminals, it can also be a tool for stopping and blocking frauds”, he said.
To fight against payment fraud and reduce the harm suffered by consumers, the European Commission made a series of proposals in 2023 for changes to the rules for providing payment services. Jarmo Lilium from the Ministry of Finance said that the aim of the new proposals was to increase consumer protection and the level of competition in electronic payments further, as the volume of electronic payments and e-commerce in the European Union is growing constantly. The changes regulate how banks and other payment service providers can share information among themselves about fraud, and ways of increasing consumer awareness. The European Commission also wants to make clearer the requirements for authorising payments so that consumers can be sure that they really want to make a particular money transfer, and that it is not a fraud. There is also a drive to increase the ways of recovering the money of consumers who have fallen victim to fraud. The member states of the European Union are currently discussing these proposals. If agreement is reached this year, the new rules will probably start to apply in 2027.
Data from Eesti Pank show a notable rise in recent years in the number of frauds committed with both payment orders and card payments. Fraudsters seem to be concentrating mainly on card payments made online, or e-purchases, and payment orders in internet banks. There were 18,300 incidents of card fraud using Estonian bank cards in 2023, and these frauds caused people to lose 2.6 million euros to the criminals. There were 5800 payment order transactions affected by fraud, with a total value of 10.6 million euros. These numbers from Estonia are still a little better though than the equivalents from elsewhere in Europe. Four in every 100,000 transactions with bank cards in Estonia were fraudulent, while the number was much larger in Europe as a whole at 15 transactions per 100,000. The picture for payment orders is however a little worse in Estonia. It is notable that a large part of the frauds occur with payments outside Europe, where strong authentication is not always required. It is particularly important to be careful when shopping in foreign online stores to avoid visiting fake websites made by scammers, or handing over money to unknown people or companies. The criminals are skilled at taking advantage of people's ignorance, applying psychological pressure and using convincing fakes and phishing, so they can trick their victims into making transactions or revealing sensitive data.
Further information on fraud and fraud prevention can be found in Estonian on the website of the Estonian Banking Association https://pettuseinfo.ee/.
Additional information:
Hanna Jürgenson
Communications Specialist
Eesti Pank
5692 0930
Email: [email protected]
Press enquiries: [email protected]