UK card fraud on the rise

New Apacs study reveals UK credit and debit card fraud abroad has more than doubled in the past year

UK – A study by Apacs, the UK banking payments association, has reported a 126% increase in credit card fraud committed abroad, which drove an overall increase in UK card fraud to £234 million – a rise of 26% in the past 12 months.

The new figures mark a reversal of the trend through 2005 and 2006, when losses to retailers, financial institutions and customers dropped by 3%. The increase in security measures in the UK – specifically the introduction of chip and pin – has driven criminals to use stolen or counterfeited cards abroad, in countries without such stringent card security. There has also been a 44% rise in frauds committed without the card present: phone, mail order and online transactions. Apacs attributes the rise to fraudsters taking advantage of the growing popularity of internet shopping. “These figures show how the fraudsters have changed tack,” says Sandra Quinn of Apacs. “Because of chip and pin, they have been driven overseas – using fake magnetic strip cards specifically in countries that have yet to upgrade to chip and pin.”

However, progress has been made in what were previously problem areas. Cash stolen from automated teller machines slumped by 57% to £17 million, and there was a reduction in theft using cards stolen in the post to just £5 million. This meant, domestically, fraud dropped by 4% – but this was more than cancelled out by the rise in foreign theft. Apacs blames an increase in the counterfeiting of cards, which rose by 37% over a year to £72.3 million.

The online threat is being combated by new security measures. In addition to the generally increased detail of online checks, Barclays and Royal Bank of Scotland have begun to issue card readers to their customers. This has led to a 67% drop in fraud committed on customers’ online banking accounts. However, ‘phishing’ fraud – whereby customers are fooled into giving away account information through phone calls or emails pretending to be from their bank – rose from 312 incidents in the first half of 2005 to 7,224 reported cases in the first six months of 2007.

The increase in identity theft has led to calls from MPs in the All-Party Parliamentary Group on Identity Fraud for the appointment of an ‘identity theft tsar’. MPs say the risks of fraud against young people who publicise personal details on social networking sites such as Facebook is unacceptably high and more public warnings should be issued. Identity crime cost the UK £1.7 billion last year, with one in four people affected. Online fraud is also putting companies under more pressure to safeguard customers’ details, with calls for harsher penalties. Apacs’ Sandra Quinn says: "What we are really looking for is all industries working together and that has to be the solution to the problem."