Industry war on card fraud reaping rewards

Losses on all areas of card fraud dropped during the year to total 440.3m, the first annual decline since 2006, according to the UK Cards Association.

But there was a 14 per cent jump in online banking fraud during the year, as criminals used increasingly sophisticated methods to obtain customers' account details.

The UK Cards Association said the introduction of Chip and Pin in recent years had led to fraud on lost and stolen cards dropping to its lowest level for two decades during 2009 of 47.9m.

Counterfeit card fraud also dived by 52 per cent during the year to 80.9m, a level last seen in 1999.

Fraud losses at UK retailers fell by 27 per cent, while UK cash machine fraud was down 20 per cent and fraud on cards that were intercepted in the post dropped by 32 per cent.

But card-not-present fraud, such as the fraudulent use of credit and debit cards to buy things over the internet, telephone and through mail order companies, also fell despite not being impacted by Chip and Pin.

The group attributed the 19 per cent drop to 266.4m to the use of sophisticated fraud detection tools by retailers and banks, as well as the growth in security systems such as MasterCard SecureCode and Verified by Visa, which make buying things online more secure.

It was the first time this type of fraud has shown an annual decline, although it still remains by far the biggest area for losses.

Online banking fraud rose to 59.7m during the year, as criminals used so-called malware to attack consumers' computers to get their account details.

There was also a 16 per cent jump in phishing attacks, under which fraudsters trick people into giving away their account details through emailing them and asking them to enter the information through a web-link provided.

Fraud losses on cheques dropped from 41.9m to 29.8m during the year.

David Cooper, chairman of the Fraud Control Steering Group,

said: "Although online banking fraud losses have shown a year-on-year increase, card fraud remains a main focus of criminal activity. However, the industry remains committed to containing and reducing all areas of fraud."