Total card fraud losses increased by 26 per cent in the six months to June 2007 compared with the first half of 2006, according to figures released by APACS, the UK payments association.
This increase has been driven by a 126 per cent rise in fraud on UK-issued cards being used overseas. In contrast, domestic card fraud continues to fall thanks to chip and PIN, with losses at UK retailers down 11 per cent and losses at UK cash machines down 57 per cent.
The introduction of chip and PIN has made it more difficult for fraudsters to commit card fraud in the UK. Criminals are now being forced to commit card fraud overseas on UK-issued cards. They copy the magnetic stripe data on our cards to create fake cards that they use in countries that have yet to upgrade to chip and PIN. However, as more countries rollout this secure technology the opportunities for criminals to use fake magnetic stripe cards overseas will decrease. To help achieve this end, the European banking industry has set itself the target of completing its chip card rollout by 2010.
Losses from online, phone and mail order shopping fraud have continued to increase year-on-year. However, this increase has to be seen in the context of increasing numbers of people shopping online and ever-growing numbers of online transactions. According to APACS figures, the number of adults shopping online has increased by 157 per cent in the last five years, from 11 million in 2001 to over 28 million last year. By comparison, online, phone and mail order fraud has grown by 122 per cent during the same time period. The fraud to turnover ratio on online card transactions has also decreased – down from 0.7 per cent in 2004 to 0.5 per cent in 2006.
Online banking fraud losses fell by 67 per cent from £22.4m in the first six months of 2006 to just £7.5m in the same period this year. This decrease occurred because online banks have successfully implemented a range of measures to detect and prevent fraud, coupled with the fact that there was an unusually high level of online banking fraud in the first few months of 2006.
Sandra Quinn, director of communications at APACS, says: “These figures show how the fraudsters have changed tack. A couple of years ago they were mainly stealing cards and card details for use in UK shops and cash machines, but today, because of chip and PIN, they have been driven overseas - using fake magnetic stripe cards specifically in countries which have yet to upgrade to chip and PIN. During the interim we will continue to use fraud intelligence systems to tackle overseas losses and encourage those countries that are lagging behind on chip and PIN to follow our lead.
“The banking industry also continues to work with law enforcement, card accepting businesses, the Home Office and organisations such as Crimestoppers to help deter and prevent the fraudsters. Consumers should also play their part - for example, cardholders should be aware that the majority of online fraud involves a criminal obtaining card details in the real world that are then used to shop fraudulently online. So we continue to urge people to register with the secure online payment systems - MasterCard SecureCode and Verified by Visa - which help prevent cards being used fraudulently over the internet.”
To further raise awareness around card security APACS, last month, published a consumer advice guide - Protect your PIN - to remind cardholders of the need to keep their PIN and card details safe and secure at all times. Educating consumers about the importance of keeping PINs safe and secure can play an important part in tackling fraud. This, together with a range of fraud prevention material and information for consumers and retailers alike, can be found at the banking industry’s fraud prevention website cardwatch.org.uk.
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