As Baltic consumers make the shift from using cash for everyday purchases to the convenience of bank cards, questions of security inevitably arise. Cases of bank card fraud and identity theft, while still rare, are a growing concern in the region. In this week's Industry Insider, The Baltic Times takes a look at the issue of bank card security, what challenges it poses and what solutions are being developed to meet them.
RIGA - To date, the Baltic states have largely managed to avoid suffering a high number of problems relating to bank card security. While fraud in other areas runs rampant, the Balts generally have less to fear from identity theft and bank card fraud.
The Lithuanian bank Ukio Bankas, for example, registered only five cases of fraud in Lithuania last year. Meanwhile, DNB Nord registered only two cases.
Liga Krapane, marketing director of the First Data Latvian division, told The Baltic Times that while bank card fraud and identity theft are "absolutely not" a major problem in Latvia, "the tendency has survived." First Data, an international credit and debit card company, found that a majority of banks decide to take the problem into their own hands by issuing their own cards, rather than hiring an unnecessary card security firm to deal with it.
However, as more people get into the habit of using credit and debit cards for everyday purchases 's and as more people are left with a greater disposable income than ever before 's instances of bank card fraud in Latvia rise.
"It is quite difficult to tell about the trends [of bank card related crimes], but we can tell that it is definitely increasing because people are using cards more often. The problem of identity theft is also [on the rise]," Rauls Kvasetes, chief of the economic crimes division of the Latvian State Police, told TBT.
Kvasetes went on to say that the main problems with bank card related crimes in Latvia arise from people trying to use fake cards from other countries in Latvian machines. He noted a few different high-profile cases that have cropped up recently involving Romanian, Moldavian and Turkish citizens attempting to use fraudulent cards in Latvian bank machines.
"This month, there were some cases where people from Romania and Moldavia were caught using [fraudulent] cards in Latvia. The problem is that people from other countries are using these cards here. And there [was another incident involving] Turkish citizens which was quite recent," Kvasetes said.
Krapane was even more drastic with her interpretation of these problems, arguing that bank card information that was skimmed abroad and used in Latvia is in fact the only serious problem surrounding the issue.
Moreover, she noted that in the recent cases involving Romanians and Moldavians, the perpetrators were caught in flagrante delicto, and never even had the possibility to get away with their crimes.
The growing problems with bank card fraud in Latvia are prompting banks to spend millions of lats to upgrade both their bank machines and the bank cards themselves.
Banks have been rapidly increasing the number of cards that include chips in an effort to pre-empt the growing number of fraud cases. According to Visa International, using chip cards can decrease the number of card fraud cases by as much as 70 to 90 percent.
"Chip is the best industry standard and the highest mass card production technical security feature. Now more then 80 percent of cards issued by Hansabanka are with chips. Our ATM and POS terminals are EMV ready as well. The bank has invested millions of lats in technical upgrades of products and systems," Inara Tiltina, head of the payment cards department at Hansabanka, told The Baltic Times.
In Lithuania by contrast, instead of working to stymie a growing trend, many banks have already fully instituted security plans which are already having an effect in bringing down instances of bank card fraud.
"Although the perception is that with a rapid growth in the number of Internet banking and payment card users, the security problem keeps increasing, the DnB Nord Bankas data shows that the number of fraud cases this year has decreased compared to the previous year," Elvina Nagelyte, manager of the distribution channels department at the Lithuanian DnB Nord Bankas, told The Baltic Times.
Nagelyte said that she believes one of the main reasons for the decrease is strong implementation of new security technologies. "We believe that chip technology, POS terminals with PIN code confirmation help to control fraud level. All newly issued DnB Nord VISA family payment cards have a microchip installed," she said.
It is best, however, for people not to rely on emerging technology and a relatively quiet history of identity theft and bank card fraud to avoid becoming victims of these problems in the Baltic states. Kvasetes said that the best way to avoid these problems is simply to use common sense when dealing with bank cards.
"People can use the basic provisions to protect themselves, such as never giving your card or pin code out to anyone, and always watching your back at the ATM. Never keep the pin code written down in your wallet or purse or anyplace near where you keep your card. These are some of the basics to avoid getting in trouble," he said.
If these basic things fail or are forgotten and someone does end up as one of the unfortunate few who are victims of bank card fraud in the Baltics, it is best to make and keep all records of transactions possible. When the problems do arise, banks deal with compensation on a case-by-case basis based on the information available.