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Fraud proceeds go to accounts outside Ireland

The Central Bank has published published a new Behind the Data (BTD) paper on Irish payment fraud statistics.

The data spans primary payment methods including credit transfers, card payments, e-money and direct debits.

Fraudulent payments are a growing concern in Europe, especially in the rapidly evolving digital marketplace, the regulator has said.

Fraudsters continually adopt new ways to exploit digital systems and bypass security measures, costing businesses and individuals millions each year.

The findings of this BTD reveal that although fraud is growing in Ireland, Irish fraud rates remain below EU averages across most payment methods with the exception of card payments.

Around 98% of card payment fraud by value was accounted for by ‘issuance of payment orders by the fraudster’.

This occurs where fraudsters use stolen card, account or personal information for a payment.

‘Manipulation of the payer fraud’ occurs where a fraudster gains trust by social engineering or impersonation, and convince the payer to make payments to them is evident in credit transfers and e-money payment.

In fraudulent credit transfers, payer manipulation fraud rose from 27% in the first half of 2022 to 42% by the end of 2023.

The ‘unauthorised payment transactions’ category is more specific to direct debits where a fraudster obtains customer information and sets up mandates without the authorisation of the payer.

Over 99% of all fraudulent direct debits were related to such fraud, with an exception in the second half of 2023 due to a once-off incident recorded in this category.

‘Modification of Payment order by fraudster’ occurs where a fraudster intercepts and modifies a legitimate payment order. It is rare (less than 2% of all fraud by value) and observed only in credit transfers.

Approximately 60% of the value of fraud is made through credit transfer, although these transactions only accounted for 4% of the total number of fraudulent transactions. 

This reflects the fact that credit transfers are often used for large value payments compared with other payment methods in Ireland. 

Credit transfer fraud amounted to €70m in 2023, with 24,000 transactions.

The BTD also reveals that the proceeds from fraudulent payments are predominantly transferred to accounts located outside Ireland.

Authentication

Incidents of fraud are more prominent when measures such as the EU’s strong customer authentication (SCA) are not in place.

The data also shows:

• The total value of fraudulent payments rose by 26% in 2023, increasing to €126m from €100m in 2022,
• The rate of fraud in Ireland as a share of all transactions is low. By value the rate is 0.001%, and by volume the rate is 0.01%,
• Card payment fraud rate is by far the highest among payment method, with 0.034% of card payments by value being fraudulent,
• Around 50% of fraud in electronic payments by value were not authenticated via Strong Customer Authentication, amounting to €52 million in 2023,
• Online card payments made up 86% of the total value of card fraud in 2023, amounting to €37.4m,
• The value of money remittance frauds has more than tripled from €2.5m in 2022 to €8.2m in 2023,
• Approximately 60% of the total value of fraud across 2022-2023 involved cross border payments, amounting to € 77m in 2023 and € 64m in 2022.

Combatting fraud in the financial system is a priority for the Central Bank, the regulator said.