New rules to reduce online shopping fraud have come into force that may see you subject to more security checks when you’re buying things online.
The rules, introduced by the Financial Conduct Authority (FCA) on 14 March mean that your bank will add an extra layer of security to the online shopping process if you’re spending more than £25 on a purchase. You’ll have to go through a so-called ‘two-factor authentication’ process with your bank to prove your identity when you checkout.
These additional steps may seem inconvenient, but the new rules are aimed at tackling the growing issue of online shopping fraud. Action Fraud reported more than 103,000 instances of online shopping and auction fraud last year which cost the general public millions of pounds.
Here we explain how the new rules work and what they mean for you.
What is two-factor authentication?
Two-factor authentication is an additional security measure aimed at confirming that whoever is trying to access an account online is who they say they are. It’s a common feature of online banking, and now also for online purchases.
To put things simply, when you sign into an account, the first-factor authentication is usually a username and password and the second-factor stage is when you’ll need to prove who you are.
There are several ways you may be asked to prove your identity, such as providing:
- Something only you know – such as a pin number, an additional password or the answer to a security question.
- Something you have access to – your bank may send you a text or an email with a code that you type into the payment screen.
- Something related to your physical person – this could be facial recognition, a fingerprint scan or an iris scan.
You’ll usually only need to provide one method of identification, but sometimes you might be asked for a few before your identity is confirmed.
How will the new rules change how you shop?
If you’re spending less than £25 in a single transaction online, the new rules probably won’t change much, but if you’re spending more than this, you’ll have to go through two-factor authentication.
All regulated banks and building societies in the UK should have their two-factor authentication processes in place already, but not all retailers will be ready for these changes. As a result, you might find that over the next few months some of your online payments will be declined if the retailer hasn’t yet got these in place, or is having teething issues sorting this out. If you know that there’s nothing wrong with your card or your account, it’s most likely that the issue is on the retailer’s side so you might need to contact them to see if there are any other ways you can pay.
The new rules might take a little getting used to at first when you’re checking out online, but in the long run, two-factor authentication should only add a minute or two to the checkout process and it’s hoped that this will protect thousands of people from falling victim to fraudsters.
Certain methods of payment already have two-factor authentication built in. For example, Apple pay uses facial, fingerprint authentication or password authentication before the payment is processed.
You might also find that you’re asked to enter your pin more frequently than before when you’re paying using contactless in shops, depending on the value of your purchases.
Is there anything you can do to ease the process?
Make sure that any bank or building society you use has your correct personal information , including your address, phone number and email address. If your details are out of date, you may find that your payments are ultimately declined when trying to pay online.
You can usually update your personal details through your banking app, online banking, in a physical branch or by calling the contact number on the back of your card.
It’s also worth making sure that you have updated your banking apps to the most current version to make the process as smooth as possible.