A survey carried out by Experian Payments into payment fraud has found that UK telecoms operators unanimously agree that their banks could do more to help them in the fight against payment fraud. Over a quarter of those questioned admitted to losses of between 0.6% and 5% of their turnover in 2007 to payment fraud, it is clear that operators would benefit from greater support from banks in tackling the problem.
Of all the different payment types, credit/debit or charge cards attract the most fraud within the industry, at 63%, with cheques coming in second at 38%.
The survey questioned the eight telecoms operators in the UK, as well as 35 other corporations across the utility and insurance sectors. Of all of the industries questioned, telecoms suffered the most payment fraud in 2007. As a result, the industry is the most risk adverse, with 75% of respondents saying that fraud considerations would stop them from taking advantage of new payment channels, such as Faster Payments or the Single Euro Payments Area (SEPA).
All the operators surveyed believe that banks need to educate retail customers further on fraud issues and want banks to flag those accounts liable to be used for fraud. Furthermore, 88% think the banks should offer insurance against fraud.
While the majority of utility and insurance companies believe that their industries are as open and frank about fraud as they can be, only 50% of operators think that their industry is communicating satisfactorily on the issue. Of those that thought operators should be more open about fraud, all agreed that they should share more information about payment fraud within the industry. Such sentiments are in line with the finding that 75% of operators believe the banks should publish fraud levels.
The telecoms industry outstrips both the insurance and utility sectors' spend on anti-fraud measures. A quarter of telecoms companies spend 5.1 to 10% of their annual budget on preventing or dealing with fraud. This is compared to just 5% within the insurance industry and less than 1% within the utilities sector.
It is clear from the survey findings that telecoms operators are the most sensitive to payment fraud. They are all using Know Your Customer (KYC) checks to counter payment fraud and 88% think this is an effective tool. However, certain challenges remain which cannot be overcome by KYC protocol.
The two biggest obstacles identified in overcoming payment fraud within the industry are a lack of recognition of the problem and the need to link bank accounts to individuals' identity information. Banks need to share their expertise and work more closely with their corporate customers to help them overcome these challenges.