Online shopping fuels sharp rise in UK card fraud

UK card fraud losses climbed by 18% in 2015, the sharpest rise in Europe, driven by online shopping and data breaches.

The data from Fico shows that most of the 18% rise in losses came from online transactions, equating to an additional £88.5 million lost to criminals. Some 75% (£66.7 million) of that increase was in card not present (CNP) fraud, and £42.4 million of CNP fraud came from e-commerce.

The UK contributed about 43% of the total card fraud losses across the 19 European countries studied, followed by Greece, Denmark, France and Russia, with CNP fraud driving losses ten percent higher across Europe.

As a share of total card payments for the researched markets in Europe, total value lost to fraud declined from .08% to .06% from 2010 to 2015 reflecting improvements in card payment security. However, the method of value lost to fraud is shifting to target the transition to online retailing, says Fico fraud consultant Martin Warwick, with a portion of the blame attached to customer expectations for a seamless purchasing experience.

“We cardholders are very demanding, and if we don’t get what we want then we let people know in the form of reviews and feedback, not to mention switching cards,” he says. “Banks want to avoid intervening unnecessarily when customers are shopping on the internet. E-commerce spending in the UK has nearly quadrupled since 2007, so you see why this is such a target for criminals.”

Related Companies

FICO

Channels

Retail banking Security Payments

Keywords

Cards E-commerce

Comments: (1)

Michael Fuller - None - London 04 August, 2016, 11:59

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The solution is simple and doens't involve cumbersome pin pads. Just stop allowing card details to be used online or any time the card isn't present. Just end card not present. Simple but it will take commitment bythe networks which won't happen if they are allowed to pass on fraud loss costs to Banks and merchants.

Mastercard, VISA et al need to stop trying to perpetuate poor practices established 50 years ago before we had mobiles and the web and produce a new token based method of allowing customers to shop online. The 16 digit card number also needs to go as we're going to run out of card numbers soon if every time you buy online a separate "virtual card number" is generated. It's only really ten digits anyway so there won't be enough numbers to go around unless we move to alpa numeric.

An app based solution which identifies the user by their biometrics and generates the code to make the transaction without the consumer having to enter card numbers and expiry dates is where we ought to be. That wouldn't be too costly to build or deploy and may actually capitalise on the trend to mobile rather than lag behing it with fat finger unfriendly 3D Secure.

The networks need to deliver this and their member banks should be demanding it.

You wouldn't start from here.

(Last night my card details were compromised for the fourth time in as few years and the Bank has stopped my card and is replacing it. All totally pointmess as the new card is no more secure online that the one they cancelled. What is really annoying is that they say that I can't continue to use AndroidPay until my new card is registerd despite AndroidPay not using the compromised number. Come on guys the token hasn't been compromised the card number has!)