Payment fraud is on the rise in Denmark and Sweden

Payment card and wire transfer fraud in Denmark have almost doubled between 2021 and 2023, new research from the central bank shows.

The National Bank of Denmark said total fraud and scam-related losses were Dkr627.4 million ($90 million) in 2023. It said payment card fraud losses made up Dkr294 million over 232,000 incidents. There were 9,400 incidents of wire transfer fraud, totalling a loss of Dkr333.2 million.

Total digital payment turnover in 2023 amounted to Dkr800 billion, the central bank said. The Danish fraud rate was 0.2%, making it lower than the European average of 0.26%.

Data from the Swedish central bank found similar results. Sveriges Riksbank recorded a 22% increase in fraudulent offences in 2023 to a total of 237,692 offences.

Payment card scam

Most scams involving payments cards occur in foreign e-commerce, the National Bank of Denmark said. This refers to vendors who are registered outside of Europe, where they are not obliged to enable security measures, such as two-factor authentication.

Their methods include fake online stores, which offer sought-after items at low prices and steal payment details when the consumer attempts to check out.

The online scammers are often located outside the European Economic Area, the research found.

The central bank also warned about threats from digitised stolen cards. Fraudsters can withdraw money from a stolen payment card after adding it to a digital wallet.

Restricting payment cards based on geographic data, or geo-blocking, is a useful way of preventing fraudulent use, the Danish central bank added. 

The Riksbank said payment card scams are often committed online, on sites where “strong customer authentication is not required.”

Wire transfer fraud

Wire transfer fraud differs from payment card scams as it involves tricking the target into making the transfer themselves. This is often called “social engineering.”

“In most cases, banks are successful in preventing wire transfer fraud”, the National Bank of Denmark said, stressing that only in a few cases do these involve modifying an existing payment order. This proves the resilience in payment infrastructures.

Wire transfer fraud in Denmark lingered around an annual figure of Dkr160 million–180 million between 2019 and 2021. But it has since skyrocketed to Dkr328.6 million in 2022 and Dkr333.2 million in 2023.

Moreover, wire transfer frauds often go to Danish bank accounts, as targets are inherently suspicious of transferring to international accounts. This means that reversing wire transfer fraud is possible, and Danish banks saved approximately Dkr67 million from being lost.

Four initiatives have been launched to prevent wire transfer fraud. These include an instant payment limit of Dkr50,000, a public information campaign, the launch of a fraud task force and certain text message sender names being protected to prevent impersonation.

In Sweden, elderly people are common victims of social engineering, the Riksbank said, adding that text message scams and impersonation were common.

A pervasive phenomenon

Digital fraud affects all cohorts of the population, the National Bank of Denmark said. Sixteen per cent of surveyed respondents paid for a product or service they never received, and 5% of respondents paid for a scam investment, it added.

Some 18% of the population had received a scam phone call. Payment card scams typically affected Danes under 50 years of age, while the usual targets of wire transfer fraud were younger than 60.