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February 21, 2001
European Commission Cracks Down on Fraud
EC has launched a plan to curb online fraud and protect cross-border transactions

Last year, incidents of fraud within the European Union increased by 50%, with most of the increase relating to payments made over the phone or on the Internet. In response to the growing problem, the European Commission has launched a three-year Action Plan to crack down on fraud, especially fraud relating to cross-border transactions. The plan's objectives focus on technology improvements, improved information exchange, better educational material and cooperation, specific fraud prevention measures and improved cooperation with non-EU countries.

While EC believes tackling the fraud problem is the responsibility of the payment systems industry, the organization is establishing systems to ensure better information exchange, stronger cross-border cooperation and coordinated preventative measures along with providing clear and binding rules with adequate sanction for those found breaking them. The Action Plan will run initially until the end of 2003 when EC will report on the progress achieved and propose further action as necessary.

Included in the Action Plan are measures such as these:

  • Introduction of a phone number in EU member states for people to report lost or stolen credit cards.
  • Publication of a set of guidelines on conditions for exchange of information related to fraud prevention.
  • Establishment of an EU-wide Web site to provide information on fraud-prevention initiatives and links to all relevant organizations.
  • Introduction of initiatives to improve security of payment products based on the findings of an EC study of specific security aspects.
  • EC will encourage the payment industry and law enforcement agencies to agree on what key items of evidence are needed to investigate and prosecute fraud cases.
While EC's Action Plan may not affect U.S. customers or businesses right away, EC hopes to expand the program internationally with the cooperation of other nations. In addition, many of EC's initiatives will be aimed at preventing fraud in cross-border transactions, which may change the way you do business with countries within the European Union. At this time, no decision has been published about how standards for cross-border transactions will change, if at all.

- by Julia M. Duncan