Business Operations & Operating Results

Fraud Prevention Operation

Index Business Operations & Operating Results Fraud Prevention Operation

Fraud Prevention Operation

To monitor credit card frauds in retail transactions, NCCC has utilized prevention system with parameters preset and reporting mechanism as a monitoring tool to identify any abnormal activities and proceed with investigations. For those merchants who are verified violating merchant contract, NCCC will take actions of educating, or warning, or monitoring, or terminating merchant contract depending upon the violation extent. Also, NCCC, as the credit card fraud reporting center, provides a fraud transaction information reporting platform that consolidates information from credit card institutions and international associations and shares the information with each other to prevent exposure to fraud; thus, establishing an effectively risk controlled credit card transaction environment in Taiwan.

《Business Scope》
For NCCC merchants, NCCC implements effective monitoring and management system, consolidates and sends analytic fraud information to the credit card institutions, which helps creating a more secure credit card transaction environment in Taiwan.

《Operating Results in 2017》
1.Risk Merchant Control and Credit Card Confiscation
(1) Number of risk merchants investigated: 210 merchants investigated in 2017, dropped 94 from 304 merchants in 2016.
(2) Number of risk merchants on monitor list: 64 merchants on monitor list in 2017 dropped 78 from 142 merchants in 2016.
(3) Number of risk merchants cancelled: 97 merchants cancelled in 2017, increased 37 from 60 merchants in 2016.
(4) Number of cards confiscated by merchants: 521 cards confiscated by merchants in 2017, dropped 57 from 578 cards in 2016.

2.Fraud Transaction Categories Distribution Analysis reported by Domestic Issuers

Data period: January 2017 – December 2017 Total fraud loss reported by domestic card issuing institutions: NT$1,888,404,920 (not actual loss)
Data source & Notes:
In compliance with the international credit card associations' operating regulations, all the card issuers must periodically submit credit card fraud transaction data for card associations to consolidate and to have a good control of the fraud information. Those transaction data were synchronized with NCCC’s big data and released on NCCC’s website, for stakeholders’ better understanding of credit card fraud trend. The above chart shows the various categories of fraud and its proportion accordingly.
Along with vigorous exploration of mobile payments and e-commerce, cyber fraud incidents have been rising simultaneously in recent years. Among those, the fraud incidents from the international well-known websites of game points selling and online video and audio streaming platform showed the most significant growth. The primary source of fraud reported by domestic card issuing institutions comes from those well-known websites. Financial losses may be avoided by dispute resolution for domestic transactions; however, increasing e-commerce transactions and associated fraud have huge impacts and become a challenge not only for domestic card issuers, but also for those in Asia, North America, Europe…etc. Especially with numerous compromised credit cards and data breaches around the world, management of e-commerce fraud becomes even more complicated, and a vital task for all card associations.
To prevent e-commerce fraud, cardholders are advised to keep their credit cards safely, to increase awareness of fraudulent transactions, and to carefully select appropriate measures, such as 3-D secure mechanism.

i. Lost: Card lost and found used fraudulently
ii. Stolen: Card stolen and used fraudulently
iii. Card not received: New/Renewed Card intercepted during mail and used fraudulently
iv. Fraudulent application: Card applied and used fraudulently without authorization by the genuine cardholder
v. Counterfeit: Card counterfeited and used fraudulently
vi. MOTO/EC: Non-face-to-face transaction made without authorization by the genuine cardholder
vii. Imprinting of Multiple Sales Drafts: Merchant falsely uses cardholder’s data such as card number and forges transactions.
viii. Others: Other types of fraud not listed above