By Andy McCue, 7 March 2006 14:10
NEWS
UK card fraud has fallen by 13 per cent to £439.4m in the 12 months since the introduction of chip and PIN technology, according to the latest figures from payments industry body Apacs.
But while chip and PIN has helped reduce card fraud on the high street, the figures show criminals have turned their attention to the internet, phone and mail order transactions with a 21 per cent rise in card-not-present fraud to £183.2m in 2005.
Online banking fraud losses have also doubled in the last year to £23.2m because of the rise in email phishing scams that dupe customers into disclosing their bank security details.
Apacs figures on card ID theft also contradict Home Office claims that ID fraud costs the UK almost £2bn each year. Following rises in previous years, 2005 actually saw a fall in the level of card ID theft by 17 per cent to £30.5m. Apacs said card ID theft in the UK remains a very small proportion of overall fraud at just under seven per cent.
Sandra Quinn, director of corporate communications at Apacs, said the banking industry is now discussing how to use chip and PIN technology to tackle fraud on card-not-present transactions.
She said in a statement: "Seeing card fraud losses come down is cast-iron proof that chip and PIN is doing its job. Back in 2002 we forecast that fraud would have risen to £800m in 2005 if we didn't make the move to chip and PIN so it's heartening to see total losses well beneath this figure."
Comments
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1. Natalie Lyndon
This is all well and good, but Tesco's has now introduced a quick scanning service which doesn't require a PIN number. You simply scan your shopping, swipe your card at the end, it thanks you and you take your shopping. This seems to fly in the face of Government guidelines and is an open invitation to any fraudster wanting to get a bite to eat!
2. Natalie Lyndon
This is all well and good, but Tesco's has now introduced a quick scanning service which doesn't require a PIN number. You simply scan your shopping, swipe your card at the end, it thanks you and you take your shopping. This seems to fly in the face of Government guidelines and is an open invitation to any fraudster wanting to get a bite to eat!
3. Ian Livermore
Card fraud is not down its just the banks using creative numbers to hide the level of fraud taking place. As a retailer we no longer see the persons card so whos card is going through the machines? Just because they might know the pin does not mean its their card. Even now after making chip and pin compulsary there are cards out there not compliant. If security of transactions were at the fore then why not chip n pin and sign?
4. anonymous
Big Deal! The cost to the industry, both suppliers and retailers, of implementing this 'technology' dwarfs the comparatively small fraud savings. This has been realised by the USA, who are not implementing Chip & PIN. It was forced by Government and unsurprisingly was ill conceived. It is only being supported by hype and scare stories. Several major retailers have fraud levels in £10's of thousands with a Chip & PIN project costing millions. Take that to the board!!
5. anonymous
The ONLY secure way of combatting Fraud is to have each and every customer authorise their purchases AFTER they have been made.
This is relatively easy, you buy something with your card, either on line or in a store, and then, when you get home, you sign onto your internet banking (or visit your bank if not on line), you are presented with your list of purchases and authorise each and every one, declining those that you do not recognise.
Once authorised, the bank release the funds to the retailer, but not until (or after a prescribed time limit the funds are automatically released).
This means that a retailer must wait a small time for their money, and chase it up if not obtained, but it would also mean that any fraudulent transactions are identified by the person who has been defrauded, not the organisation.
OK, the retailer would not get paid for a fraudulent transaction, but this would then be up to them, the bank and the police to identify the culprit, using their CCTV cameras, as opposed to the customer having to prove he has been defrauded.
Halifax Visa have done this, in a fashion, whereby you enter a password at the same time as making an on line transaction, but this fails because the password entry is at the same time as the transaction, and in the same session. The authorisation must come AFTER the purchase has been made.
Businesses authorise all their purchases and purchase orders, so why not implement a similar system with individuals. If I buy something on line, I would then wait until the transaction appeared on my on line banking screen (which can be virtually instantaneous), and then authorise it. The retailer gets paid, I get my goods and the fraudster is left out in the cold.
On line, this would be even better, as an on line retailer could hold onto goods until the money is received, and if not, then they can assume the transaction is fraudulent and not despatch the goods.
I put this idea to the Halifax, but they did not think it would be conceivable that an individual would wish to authorise all purchases. And they scotched the idea. I didnt even want royalties, just a reduction in bank charges as a result of money saved.
The downside is the retailers, because they want their cash straight away, whether fraudulent or not.
6. anonymous
I know this leads to a lot of other issues but I would of thought the simplest solution was a photo of the cutomer on his/her credit/Bank card.
7. Jo
It seems ironic that chip and pin has allegedly cut fraud. I first started a current account about 15 years ago and have never had any problems...that is until chip and pin was introduced. I recently had money stolen from my account and how did they steal it? By copying my card, recording the PIN and then using the copy to withdraw money from a foreign country.
I'm always careful using ATMs, and the bank thinks my card and PIN were recorded when paying at a certain well known chain of petrol stations. They probably had a machine hidden under the desk that recorded all of my details without me knowing. It was all too easy for the criminal especially as you only have one PIN both for swiped transactions and withdrawing money. It's a joke.
On a happier note, the bank did refund my money and were very quick to send me a new card and PIN.