Card fraud abroad has doubledChip and Pin 'forces fraudsters to go abroad'

03 October 2007

 

Credit card number and chip

Overseas card fraud more than doubled during the first half of the year as new security measures in the UK forced criminals to use cards abroad.

Fraud on UK-issued credit and debit cards committed overseas jumped by 126% during the first six months of the year to total £108.8 million, according to payments group Apacs.

But at the same time fraudulent use of cards in the UK fell by 4% to £154.8 million.

Chip and Pin

Apacs said the drop in domestic card fraud had been driven by the introduction of chip and Pin cards, which make it much more difficult for fraudsters to use counterfeit or stolen cards in the UK as they have to know the card's Pin to complete a transaction.

But the group said this had instead forced them to use the cards overseas, with criminals often copying data held on a card's magnetic strip and using it to create a fake card that could be used in a country that has not yet upgraded to the chip and Pin system.

The group said the opportunities for criminals to use fake cards would decrease as more countries introduce the secure technology. The European banking industry has set itself the target of completing the rollout of chip and Pin by 2010.

Sandra Quinn, director of communications at Apacs, said: 'These figures show how the fraudsters have changed tack. A couple of years ago they were mainly stealing cards and card details for use in UK shops and cash machines, but today, because of chip and Pin, they have been driven overseas - using fake magnetic stripe cards specifically in countries which have yet to upgrade to chip and Pin.'

Online fraud

Fraud losses on the UK high street fell by 11% during the period, while losses on UK cash machines were down by 57% compared with the same period of 2006, both of which Apacs attributed to the introduction of chip and Pin.

But while incidents of fraud where a card is present fell, so-called 'card not present' fraud, such as using a credit or debit card to buy things over the internet, phone or by post, in the UK and abroad soared by 44% to £137 million.

Apacs said this rise had to be seen in the context of an increase in online transactions, with the number of people buying things over the internet rising by 157% since 2001 to more than 28 million last year, while 'card not present' fraud increased by 122% during the same period. It added that only 0.5% of online transactions were fraudulent during 2006, down from 0.7% in 2004.

Counterfeit fraud

Counterfeit card fraud in the UK and overseas rose by 37% to £72.3 million, while card identity theft increased by 24% to £18.7 million.But losses on lost and stolen cards dropped by 15%, and fraud on cards lost in the mail fell by 50%.

Online banking fraud losses also fell during the six months, falling by 67% compared with the first half of 2006 to just £7.5 million.

Apacs said the fall was partly due to security measures introduced by banks to detect and prevent fraud, but added that there was an unusually high level of online banking fraud during the first few months of last year.

If you're a victim of card fraud and want to know your rights, or you want to know how to protect yourself from the fraudsters, read our latest card fraud report,

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