UK credit card fraud has fallen for the first time in eight years, thanks mostly to a clampdown on European counterfeiters.
Losses to credit card theft fell 5 per cent to £402.4 million in 2003 (2002: £424.6m), the annual Association for Payment Clearing Services (APACS) survey reveals.
The headline figure hides uneven progress in stamping down on various forms of credit card fraud. Cardholder-not-present fraud (a category which covers e-commerce transactions), for example, increased significantly, and fraud committed within the UK rose slightly.
Snakes and ladders
Counterfeit card fraud saw the largest reduction, down by 28 per cent (£106.7 million in 2003, compared with £148.5 million in 2002). The bulk of this reduction comes from mainland Europe where counterfeit fraud fell £26 million on the previous year.
Fraud on lost and stolen cards also dropped by two per cent (£106.1 million last year compared to £108.3 million in 2002).
APACS said much of this reduction is a result of increased use of "sophisticated fraud intelligence systems" that help to spot fraud more quickly by tracking unusual cardholder spending patterns.
Banks and retailers hope the rollout of chip and PIN - the system to replace signatures with PINs for verifying payments - will further reduce fraud from lost, stolen or counterfeit credit cards.
CNP fraud grows in importance
Cardholder-not-present fraud - which involves Web, phone and mail order transactions - is now the biggest fraud category. This increased six per cent to £116.4m in 2003. Areas which traditionally have involved smaller losses also continued to grow. The largest percentage increase in fraudulent activity was in identity theft which grew 45 per cent to £29.7m, while fraud at UK cash machines grew by a third (34 per cent) to reach £39 million.
Sandra Quinn, APACS director of communications, stressed the importance of reducing cardholder-not-present fraud (CNP) even more important. When credit cards were first introduced it was never thought they would in an environment where neither the card nor the cardholder would be present, she said. "Criminals have used this fact to their advantage primarily by stealing people’s card details through such techniques as skimming or ‘bin raiding’."
The CC industry has launched a number of initiatives designed to tackle clamp down on CNP fraud, for example, rolling out an address and security code checking system to check the validity of online transactions.
Despite high fraudulent losses, the chances of becoming a victim are still low: fraudulent transactions accounted for just 0.13 per cent of UK card transactions last year. ®
APACS’ fraud prevention website is at Cardwatch.org.uk