GFS study reveals late shipment of payment cards creates security risk

A study by carrier management firm Global Freight Solutions (GFS) has found that 2% of all shipments of payment cards are probably either delivered late or, worse, fail to turn up at all.

GFS discovered that many companies only become aware of potential problems with security by checking the codes of packages which haven’t arrived, by which time fraudsters could have struck.

Last year, card fraud in the UK was worth more than £440 million, more than a quarter of which was accounted for by cards lost in delivery and cashpoint or card payment machines which had been tampered with.

Managing Director Neil Cotty said payment system manufacturers and their customers had a right to expect more pro-active handling of such equipment. He added: “The card payment industry is right to say that Chip and PIN has reduced the potential for fraud.

“However, the security these machines or cards can provide is only as good as the security surrounding their delivery. Two per cent of late or lost deliveries may not sound a lot but the fact that the materials involved may each handle many thousands of pounds worth of purchases should be a real cause for concern.

The GFS survey included comprehensive analysis of data from major carriers and the financial services and retail industries. The company already works with some of Britain’s biggest distributors of card payment equipment, including Hypercom and Commidea.

It has pioneered the use of a system which it proactively tracks individual parcels throughout the various stages of the delivery process. It can then alert clients to delays or suspicious patterns of behaviour on single items, allowing them to cancel security codes and re-issue new machines or cards so reducing the possibility of their being compromised.

Latest estimates suggest that there may be as many as 500,000 different cash or payment point machines in operation in the UK. Mr Cotty said that the constant movement of new, faulty and upgraded machines across the country indicated the potential for crime and, the need to improve custody.

“Such measures not only stand to benefit the company which could potentially install a hacked payment machine and the customers whose cards might be abused but the manufacturers of the equipment and the organisations which distribute credit, debit and charge cards.

“By removing the need to chase up every single parcel code from clients, we make our system more efficient and better for them. By being more pro-active, we enable manufacturers to keep clients better informed and, therefore, safer.”

Mr Cotty’s comments come only two months after the figures showed card fraud in the UK had risen by 40 per cent in a year. In addition, last month a Chip and PIN fraudster was jailed for four-and-a-half years after a court was told how he had masterminded the hacking of payment machines at petrol stations in a scam which had netted a potential £35 million.

Date added 24th August 2010.