Feeds

UK card fraud hits £505m

Online losses swell 24 per cent

  • alert
  • submit to reddit

Choosing a cloud hosting partner with confidence

the banking industry hopes that losses in future will be contained by schemes such as Chip and PIN.

UK losses to credit card fraud soared last year to £504m, up 20 per cent on 2003, according to the annual report by banking organisation APACS.

Card-not-present fraud (CNP) continues to be the biggest single type of fraud tup by 24 per cent to £150.8m in 2004). APACS said these losses grew in line with the growth of businesses now offering transactions made by phone, fax or online. Identity theft (fraudulent applications and account takeover) was up 22 per cent, but accounted for only £36.9m in losses.

Counterfeit (skimmed/cloned) cards accounted for losses of £129.7m (up 17 per cent) while stolen or lost plastic is blamed for £114.4m in fraudulent transactions, many of which took place at cash machines. Fraud at UK cash machines grew by 81 per cent to £74.6m in 2004, up from £41.1m in 2003.

Chip and SPIN

Altogether fraud on lost and stolen cards and counterfeit cards accounted for almost half (48 per cent) of all losses. APACS reckons that the widespread use of chip and PIN will stem these losses, achieving the results of similar schemes in continental Europe. However online anti-fraud organisation Early Warning reckons Chip and PIN is has less to do with reducing fraud and more to do with card firms offloading their liabilities to merchants in cases of theft. Chip and PIN will merely displace credit card fraud onto the internet rather than reducing overall losses, the organisation says.

Early Warning managing director Andrew Goodwill said: “Our figures very much back up the view that Chip & PIN is simply displacing the fraud problem into CNP sales channels rather than solving the problem per se. When the fraud is perpetrated in this way, the retailer is fully liable and the card companies can simply ignore the problem. What is happening is that the retailer effectively gets screwed twice – once by the fraudster and then again by the card company taking its fees on the fraudulent sale.”

Credit card firm schemes for detecting fraud - Verified by Visa and MasterCard’s SecureCode system - require the credit card owner to register their details on the programme. "To date both of these systems have suffered from very disappointing numbers of cardholder and retailer sign up," according to Early Warning.

Phishing losses on the up

APACS notes the roll-out of Chip and PIN is bringing its own short-term problems. The unusually high number of cards - around 200,000 a day - sent out due to the roll out of Chip and PIN last year was accompanied by a rise in losses from cards never received by consumers. Mail non-receipt losses came out at £72.9m last year, up 62.7 per from 2003.

The one bright spot in the otherwise uniform rise in plastic fraud painted by APACS is a reduction in overseas fraud by 11 per cent to £92.5m, an improvement attributed to the card companies' use of "increasingly sophisticated fraud intelligence systems to detect fraudulent spending on cards".

As well as plastic card fraud, organised gangs also moved into other types of financial crime. In 2004 total losses for online banking fraud were recorded for the first time and reached £12m. The banking industry blames these losses on either straightforward phishing scams or the use of Trojans to capture security credentials through keystroke logging, a tactic which allows fraudsters to subsequently raid online banking accounts.

The industry has established sites to help online banking consumers stay safe online and on how to protect themselves against identity theft. APACS’ fraud prevention website is here. ®

Related stories

Retailers set straight on Chip and PIN
The chip and PIN insecurity card
Trojan targets UK online bank accounts
Big guns back UK IT security drive
Four charged in landmark UK phishing case
Chip and PIN intro fuels mini-boom in card crime
Credit card crime squad celebrates success
US hit for $548m in fraud losses

Providing a secure and efficient Helpdesk

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
DOUBLE BONK: Testy fanbois catch Apple Pay picking pockets
Users wail as tapcash transactions are duplicated
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
In the next four weeks, 100 people will decide the future of the web
While America tucks into Thanksgiving turkey, the world will be taking over the net
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.