British Consumers Robbed Every 7 Seconds

Card fraud hits record high despite fortune spent on chip-and-pin security

British consumers are robbed once every seven seconds, often by criminals overseas.

Julian Knight and Kate Hughes report for The Independent:

Sunday, 15 March 2009

Fraud carried outon credit and debit cards is expected to have topped £600m for thefirst time last year, when banking industry figures are released thisweek. Despite the introduction nearly five years ago of chip-and-pinsecurity technology, at a cost of hundreds of millions of pounds, thetide of fraud is rising ever higher.

A British credit ordebit card gets fraudulently used or counterfeited once every sevenseconds, industry figures show. And Apacs, the UK payments service, isexpected to say this week that card fraud rose again in 2008, this timeby more than 10 per cent to around £600m. This compares to £535m forthe whole of the previous year.

But Sandra Quinn, a spokeswomanfor Apacs, says that following the introduction of chip-and-pin – whereusers have to verify their purchases by inputting a personalidentification number into till-side terminals – organised gangs ofcriminals have been turning to what is called "card not present" fraud.

"Asthe name suggests, this means that the fraudster uses a stolen cardnumber on the internet or by mail order," she says. "This is less riskyas they don't have to physically go to a shop to hand over acounterfeit card."

A substantial proportion of fraud on UKcards has taken place overseas. "Card numbers are acquired in the UK bycriminal gangs and then used overseas to buy goods. Card fraud is atruly global undertaking and so increasingly is the fight against it,"comments Steve Head, chief superintendent at the City of London Policeeconomic crime unit.

Several "hotspots" for card fraud havebeen identified, such as the US, Canada and the Far East, but in recenttimes gangs have emerged in Australia and China, all preying on Britishcard customers.

The banks say they have stepped up their fightagainst the card fraudsters. "It is difficult to pursue some of thesegangs because they are located overseas in a different jurisdiction andthey use the internet to commit their crimes," explains the leader ofan anti-fraud unit working for one of the UK's major high-street banks,who wished to remain anonymous.

"However, generally, we are gettingbetter at spotting frauds earlier and they are getting away with lessper transaction as a result."

Although it is usually the banksand retailers that pick up the tab for card fraud, Ms Quinn saysconsumers lose out too: "Having your card details stolen and used canbe worrying and create a lot of hassle. What's more, people areincreasingly finding that when they are on holiday abroad, their cardsare being stopped for security purposes."