News Article


Card fraud and online banking fraud losses fall

By CreditMan Monday, October 10, 2011

New figures released last week show that fraud losses on UK cards decreased in the first half of 2011 compared with the same time last year, as did fraud on online bank accounts. However, cheque fraud and fraud on phone banking accounts increased over the same period.

Total fraud losses on UK cards fell to £169.8 million between January and June 2011 - a 9 per cent reduction compared with losses in the first half of 2010. This half-year total is the lowest for eleven years and also the third consecutive decrease. The sustained fall is due to the success of a number of industry initiatives such as the increasing use of fraud detection software, the roll- out of updated chip cards and the increasing roll-out of chip and PIN technology abroad. Lost and stolen card fraud losses rose slightly, increasing by £4.4 million. Initiatives such as chip and PIN have made it harder to commit 'high-tech' frauds, and criminals are instead reverting to more basic frauds centred around stealing people's cards and PINs. These scams range from distracting people in shops or at cash machines and then stealing their cards without them noticing, to simply tricking them into handing over their cards and PINs on their own doorstep.

Online banking fraud losses totalled £16.9 million during January to June 2011 - a 32 per cent fall on the 2010 half-year figure. A variety of factors have contributed to the decrease in online banking fraud, including increased customer awareness of computer security combined with banks' use of fraud detection software. However, phone banking fraud losses rose to £8.6 million (a 48 per cent increase) during January to June 2011. As with card fraud, criminals are focusing on the straightforward crime of duping a customer into believing they are dealing with a bank or police representative and getting them to disclose their financial security details - such as PINs, passwords and login details - which the criminal then uses to access the customer's bank account over the phone.

Cheque fraud losses increased from £14.0 million in the first half of 2010 to £16.4 million during the same period in 2011. Although this is a 17 per cent increase, the overwhelming majority of this type of fraud is stopped before the cheque is paid. In fact, more than £254 million of attempted cheque fraud was spotted and stopped during the clearing process in the first half of this year.

Fraud figures released by the National Fraud Authority (NFA) earlier in the year serve to put these banking fraud losses into perspective. The NFA estimated that fraud in all its guises costs the UK more than £38 billion a year - card and banking fraud accounts for only 1.2 per cent of this figure. Furthermore, in the UK - unlike many other countries outside Europe - innocent victims of any type of payment fraud on their debit or credit card or account are protected and should not suffer any financial loss.

Source - UK Payments