FCA vows to tackle fraud on lost and stolen contactless cards

FCA vows to tackle fraud on lost and stolen contactless cards

The UK's Financial Conduct Authority is co-ordinating an initiative to address the risks of fraud on contactless cards that have been reported as lost or stolen.

The UK's contactless card programme was derided as 'chaotic' by consumer groups and MPs after it emerged that customers can still be subject to fraudulent transactions up to eight months after reporting lost or stolen cards.

An investigation by consumer Website moneysavingexpert.com in September last year discovered that customers whose cards have been cancelled may still need to comb through months of statements to check for fraudulent transactions.

The issue was taken up the UK's Treasury Select Committee, which wrote to the FCA demanding that banks take action.

In a letter to the Treasury Committee, FCA chairman John Griffith-Jones points out that while the risk to consumers remains relatively low at just 0.5% of all contactless transaction, "we agree that public confidence could be eroded without further action".

The key risks to consumers occurs from transaction at retailers who process payments offline, which affects some 45% of all card purchases.

"Some, but not all card issuers, have systems that identify and block all cancelled card transactions before they are debited from customer accounts," says Griffith-Jones. "This is one of the solutions that we would like see adopted by all card issuers."

Other measures entail removing the onus on customers to identify fraudulent transactions and raising awareness among retailers of the Industry Hot Card file, which contains information on over 7.2 million UK cards which have been reported lost, stolen or compromised.

Rachel Reeves, a member of the Committee welcomed the moves adding: "The current chaotic system needs to be reformed to minimise the risk to consumers of fraudulent transactions. Bank customers must have full confidence the system works and that their money is safe. That's not the case at present."

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