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Card fraudsters target the Web

08 November 2005  |  7961 views  |  0 online shopping

Card-not-present (CNP) fraud jumped 29% to £90.6m in the first half of the year, mainly due to increasing levels of Internet fraud, according to the latest stats from the UK's Association for Payment Clearing Services (Apacs).

Apacs says the introduction of chip and PIN in the UK helped cut overall card fraud by 13% in the six months to the end of June 2005 to £219.4m, compared to £252.6m last year. The technology has also helped reduce counterfeit card fraud, which fell 31% to £45.6m.

But the roll out of chip and PIN has led to fraudsters committing more Internet, phone and mail order fraud. CNP rose to £90.6m in the first six months of this year, compared to £70.2m last year. Online card fraud accounted for the largest part of CNP fraud, increasing five per cent to £58m in H1.

The research also shows that online banking fraud losses more than trebled in the first half to £14.5 m, compared with £4m last year. Apacs says both online card fraud losses and Internet banking losses have grown hand-in-hand with the number of Internet users and huge volumes of online card and banking transactions.

Sandra Quinn, director of corporate communications for Apacs, says: "These latest online fraud losses are comparatively low considering the huge number of transactions now being carried out online and it is clear that fraudsters are having more success targeting cards than online bank accounts."

Apacs said in April that the UK's banks were planning to establish common industry standard for two-factor authentication of online transactions in a bid to cut CNP fraud and phishing losses.

The standard is thought to be based on a technical specification developed by Visa and MasterCard, will be adapted for domestic use, in the same way that the Chip and PIN standard was adapted.

Last month High Street bank Lloyds TSB lanuched a trial of a security device that generates single-use passwords in a bid to protect its Web banking customers from phishing scams and cut online fraud levels.

The bank is rolling out the Vasco-manufactured key ring-sized device to around 30,000 Internet banking customers. The device generates a unique, one time only, six digit number that customers will enter along with usernames and passwords when logging on to the bank's Web site.

Earlier this year Barclaycard also said it was in talks with leading UK retailers about plans to roll out pocket-sized card authentication devices for customers to use when shopping online.

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