Recently I was contacted by a Falklands veteran who was a victim of what appears to have been a classic pre-play attack; his story is told here.

Almost ten years ago, after we wrote a paper on the pre-play attack, we were contacted by a Scottish sailor who’d bought a drink in a bar in Las Ramblas in Barcelona for €33, and found the following morning that he’d been charged €33,000 instead. The bar had submitted ten transactions an hour apart for €3,300 each, and when we got the transaction logs it turned out that these transactions had been submitted through three different banks. What’s more, although the transactions came from the same terminal ID, they had different terminal characteristics. When the sailor’s lawyer pointed this out to Lloyds Bank, they grudgingly accepted that it had been technical fraud and refunded the money.

In the years since then, I’ve used this as a teaching example both in tutorial talks and in university lectures. A payment card user has no trustworthy user interface, so the PIN entry device can present any transaction, or series of transactions, for authentication, and the customer is none the wiser. The mere fact that a customer’s card authenticated a transaction does not imply that the customer mandated that payment.

Payment by phone should eventually fix this, but meantime the frauds continue. They’re particularly common in nightlife establishments, both here and overseas. In the first big British case, the Spearmint Rhino in Bournemouth had special conditions attached to its license for some time after a series of frauds; a second case affected a similar establishment in Soho; there have been others. Overseas, we’ve seen cases affecting UK cardholders in Poland and the Baltic states. The technical modus operandi can involve a tampered terminal, a man-in-the-middle device or an overlay SIM card.

By now, such attacks are very well-known and there really isn’t any excuse for banks pretending that they don’t exist. Yet, in this case, neither the first responder at Barclays nor the case handler at the Financial Ombudsman Service seemed to understand such frauds at all. Multiple transactions against one cardholder, coming via different merchant accounts, and with delay, should have raised multiple red flags. But the banks have gone back to sleep, repeating the old line that the card was used and the customer PIN was entered, so it must all be the customer’s fault. This is the line they took twenty years ago when chip and pin was first introduced, and indeed thirty years ago when we were suffering ATM fraud at scale from mag-strip copying. The banks have learned nothing, except perhaps that they can often get away with lying about the security of their systems. And the ombudsman continues to claim that it’s independent.