APACS: Card fraud losses decline

Tuesday, 07, Nov 2006 12:00

LATEST FIGURES SHOW UK CARD FRAUD LOSSES CONTINUE TO DECLINE IN FIRST SIX MONTHS OF 2006

NEW RESEARCH SHOWS CONSUMERS CAN STILL DO MORE TO PROTECT THEMSELVES

-Total card fraud down by 5% in first six months of 2006

-Slower growth of internet, phone and mail order fraud

-Online banking fraud increases to £22.5m

New figures released today by APACS, the UK payments association show that overall, card fraud continued to decline in the six months to June 2006. Total card fraud fell by 5% during this period, from £219.5m to £209.3m, mainly thanks to chip and PIN. Internet, phone and mail order fraud (card-not-present or CNP fraud) has increased but at a much slower rate than seen previously. CNP fraud now accounts for 46% of all losses but grew by just 5% year-on-year, compared to a 29% increase between 2004 and 2005.

UK PLASTIC CARD AND ONLINE BANKING FRAUD LOSSES (table can be viewed within attachment below)

Type of fraud/Jan toJune 2004/Jan toJune 2005/Jan toJune 2006/+/-%(05/06)

Online, phone and mail order fraud (CNP) fraud/£70.2m/£90.6m/£95.3m/+5%

Counterfeit/£66.1m/£45.6m/£53.0m/+16%

Lost/stolen/£60.5m/£44.3m/£36.1m/-19%

Mail non-receipt/£36.5m/£22.8m/£9.8m/-57%

Card ID theft/£19.2m/£16.1m/£15.0m/-7%

Total/£252.6m/£219.5m/£209.3m/-5%

Contained within this total:

Fraud abroad/£46.0m/£41.8m/£48.5m/+16%

Retailer (face-to-face)/£112.8m/£73.2m/£42.1m/- 43%

Cash machine fraud/£36.9m/£28.8m/£39.6m/+37%

Jan toJune 2004/Jan toJune 2005/Jan toJune 2006/+/-% (05/06)

Online banking fraud/£4m/£14.5m/£22.5m/+55%

Phishing incidents /126/312/5,059/+1,471%

Sandra Quinn, director of corporate communications at APACS, said

These latest fraud figures show that the industrys efforts are making their mark. However, each and everyone of us can also help defeat the fraudsters, and protect our cards and online accounts, by keeping our PINs, passwords and personal information safe and secure.

New research commissioned by APACS shows that millions of Britons are still not aware of some basic security pitfalls:

·One quarter of all Britons (25%) have disclosed their PIN to someone else - exposing them to a heightened risk of fraud and potentially making them liable for any card fraud losses they may suffer.

·More than a quarter of people (27%) use the same PIN for all their cards - which makes life easier for the fraudster given that each cardholder in the UK has, on average, four cards each.

·44% of Britons still let their cards out of their sight (in restaurants and bars for example) putting them at greater risk of fraud.

·More than half of online shoppers (51%) never check that a website address changes from http to https before making a purchase - indicating that awareness of secure shopping advice is low.

Increases in counterfeit card fraud losses were mainly driven by fraudsters copying magnetic stripe details and using hidden miniature cameras to capture PINs at cash machines. Criminals would then create fake magnetic stripe cards for use at cash machines and tills that had not been upgraded to chip and PIN. (The magnetic stripe still appears on chip and PIN cards to enable cardholders to pay in shops that do not use chip and PIN, both in the UK and overseas.) However, these losses are expected to decline in the UK in the second half of the year as all UK cash machines and the vast majority of tills are now upgraded.

Home Office Minister Vernon Coaker said:

"Fraud is not something that can be tackled in isolation - the best results can only be obtained by working together. The Government takes fraud very seriously whether the victim is a multi-million pound organisation or a single individual. That is why we provide over £1 million a year, matched by the Corporation of London, to allow the City of London Police to expand its Economic Crime Department to tackle the problem. The Fraud Bill, currently before Parliament, will clarify the law of fraud to better equip law enforcers and prosecutors with a modern legislative framework."

Chip and PIN has made significant inroads in protecting consumers from fraud in the UK face-to-face retail environment, where losses have decreased by 43%, following on from a 35% fall the year before. However, card fraud abroad has increased by 16% as fraudsters, thwarted by the introduction of chip and PIN in UK shops and cash machines, target countries that have not yet upgraded to the more secure technology. To help tackle this, the European banking industry has set itself the target of completing its chip card rollout by 2010.

Losses from online, phone and mail order fraud have grown slowly compared to the growth in the number of online transactions. More than 26.4 million people now shop online with an estimated 372 million transactions being undertaken last year. The majority of internet card fraud, however, involves a criminal obtaining genuine card details in the real world that are then used to shop online.

A number of initiatives are in place to tackle this type of fraud, such as an automated cardholder address verification and card security code system and the systems introduced by the schemes (Verified by Visa and MasterCard SecureCode) to enable cardholders to better authenticate themselves with a password when shopping online, thus making online transactions safer.

APACS is also liaising with banks, card schemes, retailers and systems vendors on an authentication system for potential use in both online and telephone shopping scenarios, and is working towards a trial in 2007. The system would work via a cardholder inserting their chip and PIN card into a hand-held card reader, and entering their PIN. On validating the PIN entered, the reader generates a unique, one-time only passcode, which the cardholder provides to the retailer for authentication with the cardholders bank. A further announcement is anticipated in the New Year.

Online bank fraud losses rose by 55% from £14.5m in the first six months of 2005 to £22.5m in the same period this year. These losses primarily involved phishing scams - typically where customers receive an email that seems to come from their genuine bank but is in fact from fraudsters who try to dupe them into disclosing personal banking security information.

There are several straightforward steps consumers can take to protect themselves against online banking fraud, such as being wary of unsolicited emails requesting personal information, and installing up-to-date anti-virus software and a personal firewall. Similarly, consumers can minimise the chances of becoming a victim of card fraud by simply keeping cards and card details as secure as possible and not letting their cards out of their sight.

Cheque fraud continues to fall due to the industrys continuing success in identifying most fraudulent cheques as they go through the cheque clearing process coupled with better public awareness of the issue. Losses fell from £21.6m during January to June 2005 to £16.0m in the same period this year - a decrease of 26%.

APACS has published its Ten Top Tips to help consumers fight card crime and stay safe when shopping or banking online. They can be found at www.cardwatch.org.uk and www.banksafeonline.org.uk .

ENDS

For further information:

Proof

Telephone: 020 7713 0008

Email: sue@proofpr.co.uk

Notes to Editors:

1 Ten Top Tips to Foil the Fraudsters

·Dont let your cards or your card details out of your sight when making a transaction.

·Destroy, preferably shred, any documents or receipts that contain personal financial information when you dispose of them.

·Do not keep your passwords, login details and PINs written down.

·Do not disclose PINs, login details or passwords in response to unsolicited emails claiming to be from your bank or the police.

·When entering your PIN in a shop or a cash machine use your spare hand to shield the number from prying eyes or hidden cameras.

·Only divulge your