Card fraud crackdown accelerated - Holiday makers are advised to take several different payment methods

A leading bank is introducing new technology which will mean that every credit card transaction will be scrutinized for fraud.  HSBC is introducing the program, which will affect 10 million card accounts and millions of transactions. The banking industry has warned that more legitimate transactions will be queried or canceled as a result.  Card fraud is rising - up 14% in the first half of 2008 - and fraud abroad now accounts for 40% of all card crime.

Travelers are being advised to take several different payment methods, including cash, credit cards and travellers' cheques when they go abroad. After several years of falling numbers, card fraud started rising again in 2007. Latest figures show that card fraud could have exceeded £600m in 2008, and banks are using increasingly sophisticated systems to try to outwit fraudsters.

HSBC previously checked 25% of card transactions but is currently rolling out a system that means all card transactions will be screened in real time, with a decision made in a fraction of a second.  Bart Patrick of SAS UK, which is providing the software system for HSBC, said: "When you put your card in the machine it's carrying out an automatic check against your pattern of normal use - and making a decision about whether that is real or fraudulent."

He said banks were constantly battling with fraudsters to reduce the levels of crime. "Card fraud is an arms race. The banks will come up with one way of dealing with it, the fraudsters will come up with a way round it."

"What we have seen with chip and pin - it was successful for 18 months, two years - the fraudsters have worked a way round it, so we are now looking at more sophisticated means."

However as the banks become more proactive in targeting fraudsters, more people could find their legitimate transactions are declined or queried.  When Sally Wiber went on holiday to Borneo, she followed industry advice and told her bank where she was going.  (See: Wanna Get Away?)

But her credit and debit cards were blocked when she tried to use them on her first day. "I spent much of the first day trying to deal with my bank and getting internet access, and then had a rather frustrating phone call trying to make sure that I could use my cards for the rest of my holiday," she said.

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