Sociological survey on consumer knowledge on non cash fraud and how to avoid it; consumer complaints (2010-2011)

Sociological representative survey of public opinion.

The survey aimed at finding out whether consumers are aware of the threats they are exposed to when making non-cash payments and whether they are informed about their rights and obligations as well as what measures they take in order to protect their personal information.

1009 respondents all over Lithuania were surveyed during the survey.

The sociological survey has shown that the threats most often identified by the respondents were identity theft (72 per cent), e-mails which phish out passwords (70 per cent), spam (67 per cent) and computer viruses (76 per cent) which aim at finding out important personal information.

The instances of abuse of personal data when an unauthorised user took advantage of another person’s payment card, withdrew money from an ATM, took a loan in the name of another person were encountered by consumers especially rarely (up to 2 per cent).
In order to protect their personal information, consumers restrict the disclosure of their personal data on the internet (52 per cent), use anti-virus programmes, firewalls (50 per cent), while 34 per cent noted that they even avoid making payments online. Only 8 per cent replied that they did not use any measures to protect their personal information, because they had no knowledge about it.

Taking into consideration the fact that the disclosure of personal data on the internet provides opportunities for fraudsters to take advantage of them when payments are made, the survey investigated how consumers understand personal data. The respondents most often attributed the personal ID number (95 per cent), the name and surname (77 per cent), the data of payment cards (59 per cent) to personal data, while the e-mail address was considered as personal data only by 18 per cent. The survey has shown that consumers have too little information about the content and scope of the concept personal data. Therefore, it is likely that consumers can disclose their personal data, which will be used for criminal purposes.

The majority of the respondents (78 per cent) do not use their payment cards to pay for goods or services online. One third (33 per cent) of the respondents feel insecure when they make payments online, nevertheless, most of them (76 per cent) do not verify the website security before making payment.

Consumers are uncertain if they have the right to recover their money after the loss of their payment card, if another person uses it. 42 per cent of the respondents tend to think that recovering the money without court is impossible in such a case.

Investigation of consumer complaints.

The Survey aims at analysing consumer complaints at state authorities with competences related to consumer protection, as well as statistical data on crimes under Articles 214 and 215 of the Criminal Code of the Republic of Lithuania.

The survey covered the years 2008-2010. It has been found out that the number of complaints in the area of financial services was growing in 2008-2009 and decreased in 2010. The complaints filed by consumers regarding potential fraud reflect the general trends of complaints regarding financial services. The majority of consumer complaints about potential fraud were not satisfied. It was ascertained the consumers were careless taking care of their payment instruments.

According to the data of the Police Department, there were 941 criminal offences registered under Article 214 of the Criminal Code (Production of a Counterfeit Electronic Means of Payment, Forgery of a Genuine Electronic Means of Payment or Unlawful Possession of an Electronic Means of Payment or Data Thereof) in 2008, 881 in 2009 and 1004 in 2010.

The trends of registered criminal offences under Article 215 of the Criminal Code (Unlawful Use of an Electronic Means of Payment or Data Thereof) are as follows: 1274 cases were identified in 2008, 2376 cases in 2009 and 2233 cases in 201.

It should be noted that there is no precise statistics on crime to record the cases of fraud while making non-cash payments. The statistics gathered at present reflects only registered offences under Articles 214 and 215 of the Criminal Code and such criminal acts may be redefined as other criminal offences.

About the project “Consumers awareness raising on non-cash payment fraud”

General objective of the project – to contribute to prevention on non cash fraud by developing and disseminating educational material for consumers in cooperation with private and public sectors.

The project will fill the gap in informing and educating various target groups of consumers on safety and possible risks of non-cash payments and contribute to the prevention of fraud (identity theft, phishing, skimming, hacking, etc.) in the abovementioned area. 

The project is directed to prevention and fight against financial crime through  awareness raising of consumers on non-cash payment fraud and communication of security issues. Need for such project is determined by some reasons:
1) increase of non-cash payment fraud (identity theft, phishing, skimming, hacking,etc) in EU and especially in Central and eastern European countries, including Lithuania;
2) increase use of non-cash payments face-to-face and online;
3) lack of consumer knowledge on fraud on non-cash payments;
4) insufficient trust on non-cash payments;
5) rapid technological developments and criminals adaptation to a fast changing environment.

EU-wide data on fraud on non-cash payments are not available, but, it is estimated that card fraud in the EU reaches about 1 billion euros per year. The most important challenges in this area – identity theft, also phishing, data hacking, etc. Results of Eurobarometer 264 shows that 6 European citizens out of 10 think that identity fraud is widespread in their country. Citizens of 10 New Member States are more dissatisfied with actions taken at a national level in their country: 56 per cent consider these actions to be insufficient compared to average in EU 15 (48 percent). 53 percent of consumers in Lithuania think that actions taken on national level are insufficient.

The use of non-cash payment instruments by consumers is rapidly growing, especially in New Member States. Consumers also  purchase more products and services through internet and pay by  non-cash payment means. By using them consumers tackle problems of security of operations, identity theft. Consumers claims analysis of 2006 in Lithuania showed that about  14 per cent of claims on financial services are related with fraud on non-cash payments.

Especially vulnerable group which is touched by the problem of fraud – young people starting use non-cash payments. In accordance with research done by the Ministry of Social Security and Labour about 76 percent of 15-17 years young people do not know  about risks on non-cash payments.

In this situation consumers as the most effected group lack of efficient instruments of consumer protection: consumer information and education on fraud prevention, risks on non-cash payments, also appropriate measures to assist victims.

The project will contribute to prevention of fraud on non-cash payments, because due to the project  activities consumers will be able to evaluate potential financial risks, to apply their legal rights,to identify secure operations, know where get reliable advice.

Specific objectives of the project: carry out a research, consisting of two segments:
a)sociological survey on consumer knowledge on non cash fraud and how to avoid it;
b) consumer complaints; present research results to the public by organizing a press conference, sending research material to the private-public stakeholders; prepare and distribute educational kit (video game followed by competition for pupils, cartoon, brochure, live radio coverages) directed to various target groups;
4. to prepare information package on the best practice and distribute through channels in EU; create special website for placement of results of project activities ; organize international workshop, involving public-private stakeholders from Lithuania, Latvia, Estonia.

The project foresees development and distribution consumers educational standard on prevention of non-cash fraud, involving in the process public – private partnership, i.e. The Police Department, Lithuanian association of banks and Lithuanian Consumer Institute.

With financial  support from the Prevention of and Fight against Crime Programme of the European Union.