TWO YEARS AGO the Caribbean Association of Banks issued the following alert: “Banks and other financial institutions across the Caribbean have been impacted by a security breach at a financial institution in the region. This potential security breach can result in the compromise of a number of Visa and MasterCard branded debit and credit cards.
“Consequently, out of an abundance of caution, your bank or credit union may be contacting you to have your card replaced. Please note that these measures are precautionary because at this point no fraud has been attributed to this case.”
It added: “Our member banks and other financial institutions throughout the region take client confidentiality and security very seriously and provide assurance that customer interest remains soundly protected.”
As expected, bank customers in Barbados and elsewhere in the region were concerned, but in the end there were no reports of major fallout from that incident, which is said to have originated in Barbados.
However, it did raise awareness about the issue of security for bank-issued cards, especially credit cards, instruments which have been targetted by frauds over the years, and continue to be.
Evidence suggests that while the Caribbean is not immune from financial fraud, including credit card fraud, the problem is not as major as in other countries, especially the United States.
According to figures released last month by The Nilson Report, a firm which monitors such transactions, the losses from worldwide fraud on credit cards, debt cards, and prepaid cards was US$16.31 million last year. For the credit card industry, specifically, fraud increased by 19 per cent last year, while the overall volume of card sales grew by a lower 15 per cent.
Despite such numbers, Mark Nelson, Visa International’s senior vice-president of risk products and business intelligence, says such fraud is not as bad as some people think.
“Fraud is not out of control,” he said, noting that fraud rates were “at near historic lows”. Nelson also said that only two to five per cent of card data access via data breaches were eventually used in fraudulent transactions.
As far as Barbados is concerned, Barbados Bankers’ Association president Glyne Harrison told the SUNDAY SUN in May that there were at least 100 000 credit cards owned by Barbadians, with an estimated value of approximately $1 billion.
“This may sound like a lot, but when you discount those who cannot get one – example, those not yet of age, those not working, and those with a bad credit history – the average person would end up with about two cards in their pocket . . . that works out to be about $10 000 per card,” he said.
Harrison said the economic downturn had not dampened Barbados’ love for credit cards, pointing out that $200 million worth in credit cards were added in the last seven years of recession.
The senior banker also said that credit card fraud was not a major problem in Barbados and that nothing was happening in this regard that would have the banks “running around extremely concerned”.
