Australian Parliament and police call on banks to create ‘opt-in’ function for contactless cards

Australian banks may have to create an ‘opt-in’ function that requires customers to consent to the activation of contactless payment technology following complaints by police about a rise in low-value payments fraud using stolen cards. The recommendation comes from a Parliamentary Joint Committee into financial-related crime, which criticised banks for introducing new technologies without first consulting with law enforcement agencies.

The report cites evidence presented by Victoria Police of a ‘significant increase’ in deception offences in which new technology had enabled offenders to commit multiple low value transactions with stolen credit cards.

While the UK has just moved to a £30 ceiling for payments by contactless, Australian banks have a more liberal approach, with up to $100 per transaction permitted with tap and go cards. Victorian Police now claim to be dealing with 100 extra credit deceptions per week from contactless crime.

In its submission, Victoria Police argued: „The major banks provide a Zero Liability Policy to customers who are victims of fraudulent transactions. This policy is clearly advertised in conjunction with ‘Tap and Go’ technology. Widespread promotion of the Zero Liability Policy is expected to motivate offenders who are likely to see that the victim will not be at a personal loss.”

The force was highly critical of the lack of consultation between financial institutions and the police in relation to the introduction of new technologies.

While the banks disputed the claims, Committee members sided with the police, arguing that financial service providers ought to consider law enforcement issues more carefully.

In conclusion, Committee view: „The committee shares the concerns of law enforcement agencies that the rollout of new technology without consultation with law enforcement agencies has the potential to become a driver of financial related crime. The committee believes that banks and other financial service providers ought to consider law enforcement issues more carefully, and to facilitate discussions with law enforcement about new technologies prior to rollout.”

„While banks have argued the fraud risk of new technologies is accounted for in their banking systems, the committee believes that consumers should have the option of disabling contactless payment features. The committee recommends that financial institutions which issue debit and credit cards create an ‘opt in’ function that requires customers to consent to contactless payment technology features being activated on their cards.”

Source: finextra.com