Figures from Card Watch, the UK banking industry’s fraud prevention programme run under Apacs (Association for Payment Clearing Services), show card fraud losses increased 53 per cent in the year to May 2000 to reach a total of £226 million.
The major growth areas are in counterfeit and in fraud on mail order, telephone or Internet transactions where the physical presence of the card is not possible.
"The most worrying counterfeit method involves copying genuine data from the magnetic stripe on one card, without the cardholder’s knowledge and putting it onto another card – this is called skimming. This can happen where corrupt staff have access to customer cards, and the information is usually then passed higher up the ladder of organised crime," says Melanie Hubbard of Card Watch.
Andrew Brown of the National Criminal Intelligence Service (NCIS) says: "Organised criminals may use sophisticated methods of card crime as a comparatively low risk way of raising revenue that later funds other more violent crime. The penalties for people convicted of card crime are often substantially lower than, for example, those where revenue is raised directly through the sale of drugs."
The current fraud trends make the UK banking industry’s £300 million roll-out of chip cards to fight card crime more crucial than ever, says Apacs. The initial benefit of the chip will be to combat counterfeiting, but it also has the potential to facilitate more secure Internet and other card-not-present transactions in the future.
The UK is at the forefront of an international roll-out of chip technology, and by the end of 2002 most of the bank-owned infrastructure will have been upgraded in the UK.