The digital bank cards have a security code that changes every 20 minutes.
A new form of digitally-enhanced bank card featuring an unpredictable three-digit security code is currently being analysed by UK banks and financial institutions as a way of combating increasing levels of fraud, according to security firm Gemalto.
The technology, which has been dubbed the "next generation" of payment card, is known as Dynamic Code Verification (DCV) and works by ditching the permanent three-number security strip code in favour of a digital readout that changes every 20 minutes.
Gemalto, which is developing a version of the technology, claims it will help to drastically slash the amount of card-not-present (CNP) fraud – when stolen bank card details are used to remotely make illicit internet, telephone or mail purchases.
"It means that you physically have to have the card in your possession in order to make a purchase online or over the telephone," Lysa Coombs, spokesperson for Gemalto, told Sky News.
"If you have simply harvested the card's details to commit fraud, you won't be able to do that as you won't have the up-to-date security code," she added.
Howard Berg, the firm's senior vice-president said UK banks are now accessing the advantages and disadvantages of the technology. "We are certainly seeing card holders like it [because] there's little change to the process they are currently using," he told Sky News.
A Gemalto brochure describing the technology stated: "[It] allows issuers to replace the static 3-digit visual cryptogram traditionally used for online purchases with a time based dynamic CVV/CVC displayed on the customer's payment card or on their mobile.
"The code changes every 20 minutes, dramatically enhancing the security level of online transactions."
According to an official report from Financial Fraud UK released in March this year, titled the 'Year-end 2015 fraud update', losses on purchases made remotely increased by 20% in 2015 (to £398.2m from £331.5m). It indicated the spike may be due to data stolen through "hacks and malware."
The research paper also noted: "Financial fraud losses across payment cards, remote banking and cheques totalled £755million in 2015 - an increase of 26% compared to 2014."
Tony Blake, a senior fraud prevention officer at the Dedicated Card and Payment Crime Unit, a police unit with links to Financial Fraud Action UK, the Metropolitan Police and the Home Office, said the new technology could help reduce online card fraud.
"It is a huge growth area and criminals are always looking at new ways to make money as more of us go online to do our shopping," he told Sky News. "The dynamically changing digital security number on the back of the card is one of the things in development which looks quite promising."
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Changes at the state and federal levels could affect enforcement
While the shock of the national elections continues to be felt, the Coalition is sizing up the likely impact on fraud-fighting.
The biggest concern is whether the Trump administration will continue the federal government's aggressive stand in combatting healthcare fraud. FBI investigations and Department of Justice prosecutions have helped set records for arrests, convictions and financial recoveries in the last eight years.
Another potential concern is whether repealing the Affordable Care Act will gut anti-fraud programs that were part of the original bill. Medicare has much more capacity and authority to crackdown and prevent healthcare fraud today. Its ability to shut down scams quickly and use the latest technology such as predictive modeling could be in jeopardy.
Republicans also likely will push for interstate sales of health insurance. We've repeatedly warned that such an unregulated system will spur scam artists to sell fake policies to unsuspecting consumers.
Another potential casualty could be the Healthcare Fraud Prevention Partnership, an alliance of more than 60 private insurers and public agencies.
The partnership's data-sharing program has helped save more than $260 million for healthcare payers. It would be foolish not to continue, but the program operates at the whim of the administration and HHS secretary. That's one reason we advocated writing the program into federal law, but it's too late for that now.
As for state elections, Wayne Goodwin, the insurance commissioner in North Carolina, lost his election. He's a strong supporter of anti-fraud measures. Goodwin sponsors an effective fraud bureau, and chairs the NAIC Anti-Fraud Task Force.
The change of governors and insurance commissioners in other states, such as Delaware, also may affect law-enforcement efforts to combat fraud.
We'll continue analyzing the federal and state results. We'll report developments as they emerge. In the meantime, the Coalition stands ready to work with the new office holders to advocate strong measures that effectively combat insurance fraud.
More common ground needed on reporting, acting on suspected scams
I just returned from the NAIC's summer meeting. It included the antifraud task force meeting, attended mostly by directors of state insurance fraud bureaus. I also met with insurer SIU directors before the NAIC event.
I felt as if I'd entered a time warp. Discussions at both meetings reminded me of a breakout session I chaired at a Coalition summit more than a decade ago on the status of insurance fraud fighting. SIU directors and fraud bureau directors both attended.
The main discussion by insurers then was about the “black hole” of information sharing. Insurers said they send cases to fraud bureaus for investigation, and never hear a word back. The fraud bureaus contend insurers send them weak cases, or ones not well-vetted.
That's what I heard last week as well. Insurers seemed at a loss about what happens to their cases they refer to fraud bureaus. And, several fraud bureaus grumbled about the lack of good referrals from insurers.
Insurers and fraud bureaus clearly need better dialogue so everyone fully understands each other's needs.
One fraud bureau chief talked about how a few insurers in his state haven't reported a suspected scam in years, even though reporting is mandatory. Are those insurers doing such a good job that nobody's trying to scam them anymore? Doubt that.
Insurance-fraud laws broadly define the crime, though there's no definition of suspected insurance fraud. Each insurer could have its own definition, which determines which and how many cases it sends to the fraud bureau.
Most insurers don't report all suspected frauds. We understand that. Besides, fraud bureaus don't have the staff to handle every case. But for an insurer to say it has no suspected frauds to report does a disservice to the larger fraud-fighting community and our common cause.
Fraud bureau directors and SIU leaders need to come together, develop a greater understanding and find more common ground so they can work jointly to combat fraud in the most efficient and effective ways possible.
We urge both sides to reach out to the other to make that happen.
The Ramapo, N.Y. man and his girlfriend met with someone they thought was a hitman to kill his wife Susan — and rough up the fraud investigators, federal prosecutors contend. The investigators were looking into whether Bernstein bilked health insurers with false claims.
The purported hitman was a wired informant. He revealed the suspected plot to police.
Police also set up Hollywood-style murder photos. They applied makeup so the investigators would look mugged. The snitch then showed Bernstein the seemingly grisly images to fool the foot doctor into revealing more suspected evidence.
Bernstein could be innocent. He'll have his justly deserved day in court.
Whatever the outcome, the case shines a light on a broader concern that insurance fraud is widely perceived as a relatively tame white-collar scam with few real victims.
Once embedded as a norm ... this lax attitude edges dangerously closer to making an $80-billion insurance crime a socially acceptable way people can lard their bank accounts, live well, or exact policyholder revenge against insurers for high premiums paid out without claims.
Insurance fraud has a seedy history of Mafia-style violence — or threatened harm — against against investigators ... judges ... witnesses ... and other hardworking professionals just trying to do fair justice. Blind panic and fear when cornered by courts and investigators can turn swindlers into murderers.
An insurance agent shot and killed two fraud investigators who were looking into his practices. Rhett Jeansonne and Kim Sledge were with the Louisiana insurance department. John Melvin Lavergne gunned them down at his Ville Platte agency, then shot himself.
Alarmed insurance regulators around the U.S. quickly strengthened procedures for how investigators can stay safer when visiting a suspect's office or home.
Sallie Rohrbach died doing her duty as well. She was an auditor with the North Carolina insurance department. A troubled agent clubbed her to death with a chair while she was in his office reviewing his books for possible theft of client premiums.
Tyesha Towanda Roberts offered to hired someone to shoot a witness involving insurance torchings of a home and two vehicles. The Baltimore woman wanted $10,000 to set up the murder. A cohort offered to help shoot the witness himself. Except that Roberts and her cohort spilled the plot to an undercover officer. Roberts was convicted, and will be sentenced in August 2016.
Nightclub insurer mogul Jeffrey Cohen plotted to assassinate the judge overseeing the bankrupt insurer's liquidation.
Cohen deceived regulators into thinking his failing insurance empire was financially solid.
A former nightclub bouncer, Cohen drew up a hit list of Maryland and Delaware officials involved with his case. Plus driving directions to the home of the judge overseeing the insurer's liquidation.
Seven assault weapons were seized at Cohen's home. “Society needs to look at the fact that killing isn't wrong in certain circumstances, and killing culls the weak,” he said in a sound recording. Cohen was handed 37 years in federal prison.
Buying the narrative that insurance fraud is tame feeds the dystopian mindset that eggs people to use violence to defend their schemes. Even seemingly average people can become killers when their fraud plots start unravelling.
So when you think of insurance fraud as a soft and minor crime ... just visit Sallie Rohrbach's grave. She's buried in Raleigh Memorial Park in Fuquay-Varina, N.C.
Proposing ongoing blog about all things insurance fraud. Consumer attitudes that let fraud thrive ... strategies for changing minds ... new fraud trends and why they're important ...
Profile how people are victimized. How fraud crimes are investigated and convicted. Highlight breaking cases and fraud trends — and why they're important.
Also look on light side — knuckleheads who bumble to bogus fake workers comp injury claims.