WRITTEN QUESTION E-2178/02

by Jan Wiersma (PSE) to the Commission

(18 July 2002)

Subject: Fraud involving bank cards in the Netherlands

On 17 November 1998 the European Parliament adopted a resolution(1) urging the Commission to adopt legislation or other measures to make the use of bank and credit cards much more secure.

Among other things, Parliament called for:

- the introduction of magnetic strips with electronic watermarks or a chip and the affixing of the authorised user's photograph to the card,

- the use of biometric characteristics to identify the cardholder to be made compulsory as soon as possible.

A recent spate of large-scale fraud involving bank and credit cards in the Netherlands has shown that the data recorded on the cards were not adequately protected.

Can the Commission therefore say:

1. How many frauds of this kind occur in the European Union every year?

2. What practical measures the Commission has taken to implement Parliament's recommendations for improving security in the use of bank and credit cards?

3. What are the obstacles to greater security in the use of bank and credit cards?

4. Whether it is now prepared to present the necessary proposals in this area to Parliament in the near future?

(1) Resolution on the communication from the Commission to the European Parliament, the Council, the European Central Bank and the Economic and Social Committee: A framework for action on combating fraud and counterfeiting of non-cash means of payment A4-0396/1998 (OJ C 379, 7.12.1998, p. 5).

Answer given by Mr Bolkestein on behalf of the Commission

(11 October 2002)

1. The Commission does not have precise statistics on the current level of credit card fraud in the Union. The Commission Fraud Prevention Action Plan(1) states that the proceeds from all types of payment card fraud were estimated at EUR 600 million in the Union in 2000 (roughly 0,07 % of the payment cards turnover).

2. As a result of the Resolution of the Parliament, the Commission is taking action to increase the security of payment transactions. To prevent fraud and counterfeiting of non-cash payments, the Commission adopted in February 2001 a three-year Fraud Prevention Action Plan based on a partnership among all stakeholders. It provides for five main areas and 11 main actions that the Commission and other parties should undertake. Security improvements are the main priority of the Action Plan.

Discussions on security issues, including on the progress in the migration to chip cards in the Union, take place regularly at the meetings of the Union Fraud Prevention Experts Group, the steering group for the implementation of the Fraud Prevention Action Plan.

The Commission recently launched a study which aims to provide an objective assessment of the security of remote electronic payments (e.g. fund transfers, remote payment by card and mobile payments) in the Internal Market. The study has been committed and final results are expected by the end of 2002.

The Commission will organise in 2003 a conference on the security of payments in the Internal Market, with a view to improve information on the security of modern payment products and systems.

3. The payment card schemes, the banks and retailers are deploying substantial resources in order to introduce chip cards in all Union countries by 2005. There is a huge number of cards to be re-issued and equipment (terminals, automated teller machines, etc.) to be replaced or modified. This process needs to be supported by all interested parties in order to overcome reluctance and potential obstacles.

4. By the end of 2003, the Commission will report on progress achieved under the Fraud Prevention Action Plan and propose, if necessary, further action.

(1) Communication from the Commission Preventing fraud and counterfeiting of non-cash means of payment, COM(2001) 11 final, of 9.2.2001.