Apacs disputes erroneous CPP card fraud claims

Over 12 million Brits - one in four of the population - have fallen victim to credit or debit card fraud, according to a report from life assistance company CPP. However the figures - initially presented as a year-on-year number - have been labelled "wildly out of line" by payments association Apacs.

The poll of 1679 cardholders, conducted by Tickbox.net/Opinion Matters claimed that around 26% fell victim to card fraudsters in 2008, up five per cent on the previous year.

However, Apacs rounded on the firm accusing CPP of using "misleading information and spurious statistics" to support the 12 million figure.

The payments body, which will publish its own fraud statistics for 2008 in March, says its most recent figures indicate that in 2007 there were just over a million reported cases of card fraud, suggesting the CPP numbers are "wildly out of line".

CPP has since moved to clarify its earlier statements, saying that the 12 million card fraud number refers to total lifetime figures, not just last year's data.

The average sum fraudulently transacted is over £650, with one in 20 victims reporting losses of over £2000. Yet 42% of victims did not know about these transactions and only found out they had been defrauded when alerted by their bank.

Online fraud affected 39% of victims, while card cloning from a cash point or chip and pin device accounted for a fifth of cases. Out of all cards that are physically lost and stolen, one in ten are also being used fraudulently.

Separately, a survey from CyberSource has found that one in eight UK businesses in 2008 suffered fraud losses in excess of five per cent of total online revenues.

Of 150 online merchants questioned, 40% say the amount they lost to fraud rose in 2008 with an overall increase 2.6%.

The losses come despite continued investment by retailers in tackling fraud. Around 16% of merchants integrated Verified by Visa and MasterCard SecureCode schemes in 2008, meaning 60% of firms in the UK now employ these services.

Related Companies

CyberSource Corporation

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Retail banking Security Payments

Keywords

Cards E-commerce Research/analysis

Comments: (2)

Jan-Olof Brunila - Swedbank - Stockholm 30 January, 2009, 07:51

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It is astonishing that still in 2009, it is possible to buy valuable easily resold items over the internet and pay for these with a mere payment card number! Imagine the reaction if you step into a department store on High Street and pick up an expensive item and then go to the cash register and there you orally give the shop assistant your bank account number from where the store can pull the funds. No proof of identity given, no proof of that the bank account number belongs to the customer. This is not possible in the "physical" world since you would be demanded to pay via your chipcard, either key in your PIN or even show your photo ID card as proof that you are the legitimate holder of the payment card. In the "virtual" world this logic does not apply - diminutive controls are prevalent at the moment of payment for the majority of transactions. And then we in the industry call the misuse "fraud". As things have been arranged with internet shopping payments via cards, we should be grateful for every correct transaction that takes place since the "fraud" transactions have every possibility to become the rule and not the exception. So if the UK market has 1 or 12 million defrauded customers is not really the issue. The issue is that they can easily be 50 million.

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A Finextra member 30 January, 2009, 15:49

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I'm glad that the original source of the study (that showed one in four to be a vicitm of existing account fraud) announced that they have discovered an error, as the original findings just seemed impossible. My company publishes a very rigorous and nationally-representative study in the US, and such numbers seem to defy possibility for any region of the world. Global card industry providers would raise the security parameters on individual transactions long before fraud would ever be allowed to reach such a level. While fraud takes a serious toll on individuals, it is industry (payments providers and merchants) who bear the brunt of fraud losses, and industry also determines what level of systemic settings will allow future transactions to go thru.