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UK phishing fraud losses double

07 March 2006  |  28742 views  |  0 APACS Card

Direct fraud losses from online phishing scams in the UK almost doubled in 2005 to £23.2m, according to statistics from the Association for Payment Clearing Services (Apacs).

Apacs says the introduction of chip and PIN technology has helped cut credit and debit card fraud for the first time in a decade, but organised gangs of fraudsters are now increasingly targeting the Web.

Losses from Web banking fraud - which are mainly the result of phishing scams where customers are duped into disclosing personal financial data - rose 90% to £23.2m in 2005, from £12.2m in 2004.

Rising phishing fraud losses have prompted some banks in the UK to roll out extra security to customers. Last week Alliance and Leicester said it is introducing a form of two-factor authentication across all of its Internet accounts.

Meanwhile Lloyds TSB has conducted trials of a Vasco two-factor authentication device which it says was a success. But the UK bank has no plans for a large-scale roll-out of the technology and is instead waiting for guidance from Apacs on plans for an industry standard card-reading system.

Apacs said in April last year that UK banks were close to agreeing a common industry standard for two-factor authentication of online transactions. It was thought the standard would be based on a technical specification developed by Visa and MasterCard which would be adapted for domestic use, in the same way that the Chip and PIN standard was adapted.

Banks were expected to begin distributing the authentication devices to customers within a year, but as yet no system has been introduced.

As well as reducing losses from phishing scams, the system is expected to cut card-not-present (CNP) fraud, which jumped 21% in 2005 to £183.2m from £150.8 in 2004. But Apacs claims the rate of increase for CNP fraud has fallen for the first time since 2003, due in part to e-retailers checking cardholder addresses, as well as initiatives like Verified by Visa and MasterCard SecureCode.

Although online banking and CNP fraud are on the rise, overall total card fraud losses fell by 13% to £439.4m in 2005, compared to £504.8m in 2004, due to the introduction of chip and PIN technology. Sandra Quinn, director of corporate communications for Apacs, says the fall in overall card fraud recorded in 2005 was the first since 1995.

"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," says Quinn.

Counterfeit card fraud fell 25% to £96.8m in 2005, while fraud on stolen or lost credit cards was down 22% to £89m. Mail non-receipt fraud - which is committed on cards stolen before the genuine cardholders receive them - fell 45% to £40.0m.

Cash machine fraud was also down by 12% to £65.8m, from £74.6m in 2004, and there was also a 17% fall in card ID theft which fell to £30.5m (£36.9m in 2004).

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