Card-Related Frauds in Hungary: Trends and Statistics for 2002

Summary

The report on card-related frauds in Hungary for the year 2002 highlights a significant increase in total fraud, accounting for 0.005% of acceptance turnover, with a total amount of HUF 189.2 million. The distribution of losses saw a notable shift from the previous year, with a sharp decline in counterfeit card use and an increase in stolen and lost card use.

Analysis

The report attributes the improvement in fraud detection to enhanced monitoring systems, increased information exchange between institutions, and successful investigative work by banks and police authorities. Additionally, banks’ ability to send SMS messages following transactions has helped detect suspicious activity and prevent further illegal use of cards. However, there was a shift in the types of fraud, with counterfeit card use declining and stolen and lost card use increasing.

Recommendations for Reducing Fraud

• Adoption of Chip Technology: The report highlights the importance of adopting chip technology with PIN codes to reduce unauthorized uses of lost or stolen cards.
• Deadline for Implementation:
  • MasterCard: January 2005
  • Visa: January 2006
• Expected Outcomes: The migration to chip technology is expected to lead to a further decline in counterfeits and make unauthorized card use even more difficult.

Key Findings

• Total fraud increased by 20% to HUF 189.2 million
• Counterfeit card use declined sharply, while stolen and lost card use increased
• Banks bear the overwhelming majority (87%) of losses arising from fraudulent card use
• Countries that delay this transition may become increasingly vulnerable