Organised fraud rings accounted for a high proportion of the estimated £700 million lost to retail crime in the UK last year, and until recently almost the only action that could be taken against them was defensive.
But a new initiative, the Retail Week of Action (RWOA), pioneered by Visa, is starting to take down some of the most active card-not-present fraud organisations. And if more retailers got involved, many more of the fraudsters could be rounded up.
The RWOA was the brainchild of Debbie Grant, a Senior Policy Lead for Visa within its Fraud Strategy & Criminal Disruption team. Highlighting the initiative at the eRisk conference in Leicester on 5th October, Debbie urged more retailers to take part.
If you are interested in taking part, email Debbie Grant to register your interest and find out more by clicking here.
Many weeks of preparation led up to the first RWOA in the summer of 2016 and the arrest in the UK of 11 individuals suspected of at least £222,000 worth of fraud.
The arrests were carried out by the Dedicated Card and Payment Crime Unit (DCPCU) of the City of London Police, while the intelligence work had been done largely by Visa in collaboration with banks and merchants.
A repeat performance in October last year, involving the DCPCU and Visa again with 11 UK retailers, 10 UK banks and an acquirer, led to the arrest of another nine suspects linked to £318,000 worth of fraud. The following week a European RWOA masterminded by Visa resulted in 42 arrests of individuals suspected of €3.5 million worth of fraud. Links with other crimes were also revealed including money laundering and terrorism.
The third and latest of the DCPCU’s RWOAs, held in London, the West Midlands, Kent and Dorset in June this year, resulted in 11 arrests and related to a combined loss value of £650,000.
“This was really Visa’s idea and we approached the DCPCU,” Debbie Grant tells Retail Risk News.
The concept had already been tested with a series of ‘airline days of action’ masterminded by Visa since 2013. In October last year five of those days resulted in the arrest of 193 people for airline fraud across Europe. Retail fraud is ripe for the same treatment.
“Until recently Visa wasn’t working with merchants because they are not our clients,” says Debbie. “But for me merchants play a crucial role, and when I took on this role two and a half years ago I knew we had to get retail merchants on board.
“The retailers have intelligence that the issuers don’t have, such as delivery addresses and IP addresses. If we add those pieces to the jigsaw we can penetrate organised crime groups.”
So far Visa has not been turned down by any retailers it approached to collaborate on an RWOA, excepting one, where the relevant person was about to change jobs, says Debbie.
Unfortunately, she says, all of these public spirited retailers wish to remain anonymous.
In her conference presentation Debbie spoke about her experience of going out with DCPCU officers to witness an arrest. Although the suspect arrested had not been directly identified by a retailer or an issuer, the lead came from an arrest two days previously on the basis of information from retailers.
“The first suspect might have been responsible for only £2,000 worth of fraud, but when we went to the second house we found evidence of money laundering worth millions of pounds. And those laundered funds could have come from drugs and all sorts. That shows how following up a relatively small fraud can uncover much bigger crimes.”
Although there are several UK police agencies specialising in cyber-enabled fraud investigations, including the nationwide Action Fraud service and the Metropolitan Police’s Operation Falcon, the DCPCU is the only such unit with a nationwide remit and full police powers, Debbie says.
“DCPCU was originally part funded by the Home Office, and is now funded 100% by the UK Banking Industry. It concentrates on investigating fraud that the banks have intelligence on. At the moment the focus is on the issues facing the banks. One option moving forward is for the Merchants to part fund the unit through UK Finance, this might result in them being able to get direct support from the unit.
“Some small banks contribute a very small amount; at the same time if they put a case forward the DCPCU has to investigate it. To you and me it may be a completely worthless case compared to one of the big players.”
Part of the problem is that the impact of fraud on society is under-estimated, Debbie believes.
“With the government cuts the police have other KPIs. If they have an area that is full of murder, rape, terrorism and burglaries those will be their priorities rather than fraud. What people don’t realise is that fraud is a major factor in other areas of crime, such as money laundering, child trafficking and terrorism.”
As of last year the DCPCU claimed to have saved £470 million in fraud and to have made around 500 arrests since it was set up in 2002. That’s a small number of the people involved in online fraud, judging by all the adverts out there for lucrative work from home.
“DCPCU doesn’t go after the mules, that’s why we only have a small number of arrests,” Debbie says. “We go after the organised crime groups, the big boys. There is no point in going after the mules. You stick one down and the next one pops straight up again.”
Another way retailers can take action, she says, is to put pressure on Instagram, which she alleges is advertising fraudulently acquired goods from major high street brands.
“For the police to get that taken down there are a lot of hurdles. But if a retailer contacts Instagram and says you’re breaching intellectual property agreements then Instagram will take that down within 24 hours. When we did the last RWOA the merchants did that and got a lot of sites taken down.”
From small beginnings in 2013 the airline days of action have now resulted in hundreds of arrests. Debbie is hoping the RWOAs will go much further, extending their reach in the UK and Europe to become business as usual.