New moves to counter electronic fraud

Date: 12/02/1998

By Simon Coss

A LONG-delayed report on the problem of fraud involving electronic payment systems should be published before the summer, European Commission officials said this week.

The move comes more than a year after the Commission said it would look into the problem, but failed to follow this up with any action.

Experts in Commissioner Anita Gradin's small justice and home affairs (JHA) task force complained at the time that they simply did not have the staff or resources to prepare the report.

It now appears that Financial Services Commissioner Mario Monti has stepped into the breach and that the report will be drafted by his much larger Directorate-General for the single market (DGXV), with the JHA task force playing a secondary role.

Financial services experts stress that they will not be seeking to harmonise national laws on electronic payment crime, but will instead attempt to identify common problems and come up with suggestions for dealing with them.

"We may not suggest hard legislation but rather an action plan that everyone can agree upon," explained one.

Officials in DGXV stress that the report will examine all methods of electronic payment, from credit cards to new developments such as electronic money transfers or payments made over the Internet.

"We will be looking at everything from cheques through to payment cards, from telephone banking to virtual payments to e-money - whatever. Fraud and counterfeiting don't discriminate, they just go where the money is," explained one expert.

Whether this approach produces results able to satisfy the electronic payments industry remains to be seen. Initial reactions from the sector have been very positive, but industry insiders are clear about what they would like from the Commission.

"We want harmonised legislation across the EU. That way, criminals can be prosecuted for the same crime in all countries," said a representative of Europay, an organisation which provides credit cards for more than 100 million Europeans.

It was Europay, along with the banking community and many credit companies, which originally suggested that the Commission draw up a report.

The problem of payment fraud was addressed briefly in a study entitled Fraud Without Frontiers which was produced for the Commission last year by a firm of consultants. The report now being worked on is expected to build on those initial findings.