It’s led with the fact that fraud overseas has pushed up the losses for UK banks. Indeed, the figure rose 77 per cent on 2006, costing£207.6 million. Most of this comes from cloned UK payment cards being used for face-to-face transactions overseas.
However, the real story behind the statistics is that card-not-present (CNP) fraud continues to rise – clearly being the preferred tactic for criminals now that Chip & PIN is making other forms of fraud more difficult.
Most retailers probably already know that CNP fraud has continued to rise, because they are victims of it just as much as cardholders.
In fact, CNP fraud rose 37 per cent between 2006 and 2007 and is the main reason why total card fraud rose for the first time since 2004. Card fraud is now higher than it was before Chip & PIN was introduced.
Some 77 per cent – or£223 million – of the CNP fraud total is committed using the internet, up from 73 per cent in 2006.
Apacs communications director Sandra Quinn is honest in saying that take up by cardholders of the Verified by Visa and MasterCard SecureCode schemes has not been as high as the banks would like.
Part of the problem is that consumers are protected against fraudulent use of their cards online, whether they opt in or not. Quinn is aware of some cards that make signing up to the relevant scheme mandatory if the cardholder wants to shop online, but most have not yet introduced this as a condition of use.
She says that more needs to be done, by retailers and banks, to make the schemes accessible to customers. Quinn adds that if it feels like “just another password to remember”, then it won’t be attractive.
The hope is that this growing problem can be limited as more cardholders sign up.
However, fraudsters won’t just give up on their criminal careers as one more area of weakness is closed off to them. As the UK banking industry puts better security in place, it makes overseas fraud even more likely.
The European banking industry aims to have the global Chip & PIN standard in place by 2010. This should reduce the incidences of counterfeiting of UK cards for use in Europe, in the same way as has been achieved in the UK. However, both the US and Australia are in Apacs’ top three countries for overseas fraud and so the European scheme will have no impact here.
Quinn also accepts that international levels of CNP fraud using UK card details could be the next battle.
With more UK retailers opening up international operations, getting the problem of fraud off your doorstep is no longer a reason for celebration.
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