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UK card fraud losses rise as crooks go back to basics

12 March 2013  |  9636 views  |  2 ATM

After years of decline, UK card fraud losses rose last year as crooks returned to old-school low-tech techniques, according to Financial Fraud Action figures.

Fraud losses on UK cards plummeted from £610 million in 2008 to a 10-year low of just £341 million in 2011, thanks in large part to the introduction of chip and PIN. But 2012 has seen a blip in the trend, with a 14% increase to £388 million, says Financial Fraud Action.

The rise has been driven by crude scams such as ATM shoulder surfing and confidence tricks designed to bypass security systems by duping consumers into handing over their own cards and PINs.

Detective Inspector David Timmins, DCPCU, says: "As a consequence of more robust security features, criminals are resorting to low-tech deception crimes designed to dupe customers into parting with their cards, PINs and financial passwords.

"These fraudsters can be highly persuasive, so our message to customers is simple: your bank or the police will never call, visit or email you to request your login details or PIN, or to collect your card. If you receive such a request, it will always be fraud, so protect yourself and call the police."

Another major reason for the increased losses has been UK cards being compromised and used in countries, such as the US, where chip and PIN has yet to be introduced.

Meanwhile, losses on CNP transactions rose by 11% in 2012 but, says Financial Fraud Action, this needs to be seen in the context of the sharp 18% increase in card spending on the Internet over the last year.

There was also a rise in online banking fraud losses, up 12% in 2012 to £39.6 million, driven mainly by fake Web sites which have tricked consumers into giving away their login details. Telephone banking fraud losses were down 25% to £12.6 million but cheque losses rose two per cent to £35.1 million.

Comments: (2)

A Finextra member
A Finextra member | 13 March, 2013, 07:05

When it comes to defrauding, I guess these are two skill sets that have been deployed for a while, one being the subtle out of sight technology based hacking of user account information through phishing, key stroke collection etc and the soft skill based face to face techniques that relies on the physical skills of the fraudster and gullibility and ignorance of the user. While the former one can be handled centrally through periodically stregthening the FRM systems the latter is going to be tough to stem as there it is going to depend on the individual users ability to detect and deter. I guess banks need to continue to educate their users and warn them from time to time and include this in their tools to combat Fraud.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 15 March, 2013, 08:08

Kudos for some sensible and balanced reporting on the subject of fraud. For the first time, I'm seeing a statement like "Meanwhile, losses on CNP transactions rose by 11% in 2012 but, says Financial Fraud Action, this needs to be seen in the context of the sharp 18% increase in card spending on the Internet over the last year". This clearly proves that fraud as a percentage of transaction value is actually going down. I look forward to the day when we can see more accurate headlines like "CNP fraud now rarer than before".

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