UK card fraud losses plunge to decade low

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Fraud losses on UK cards fell to their lowest level for a decade during 2010 as a raft of industry initiatives paid off.

Losses on credit and debit cards dropped by 17 per cent during the year to £365.4m, the lowest level since 2000, according to industry body the UK Cards Association.

The group credited the decline in losses to the ongoing investment by the banking industry to prevent fraud, as well as increased awareness among consumers.

Initiatives include increased use of fraud detection tools by banks and retailers, greater fraud data sharing, and the roll-out of the chip and pin system abroad.

There is also better awareness among retailers about how to protect their payment equipment from criminal attack and increased take-up schemes to prevent online card fraud among consumers.

Within the total, counterfeit card fraud, where a card is cloned or skimmed, dived by 41 per cent to £47.6m, while there was also a 15 per cent drop in so-called card-not-present fraud, when a card is used to buy things by telephone, internet or post, and a 7 per cent fall in fraud on lost or stolen cards.

Losses as a result of identity theft were broadly unchanged at £38.1m, and the only area to see an increase was fraud on cards that were intercepted in the mail, with losses rising by 22 per cent to £8.4m.

There was also a 23 per cent drop in losses on UK cards that had been fraudulently used abroad.

Money lost as a result of online banking fraud fell to £46.7m during the year, a 22 per cent decline, despite the number of phising attacks, under which criminals try to trick people into revealing their account details, jumping by just over a fifth.

But phone banking losses rose by 5 per cent to £12.7m, mainly as a result of people being tricked into giving their account and security details to someone who had cold-called them or through responding to a fake email.

Cheque fraud also continued to decline, partly as a result of the continued fall in this type of payment method, but also due to the industry stopping the vast majority of attempts before a cheque is paid. Overall fraud losses on cheques dropped by 3 per cent to £28.9m.

Detective chief inspector Paul Barnard, head of the Dedicated Cheque and Plastic Crime Unit, said: “Whilst another drop in fraud is good news, the fraudsters haven’t shut up shop which is why there can be no room for complacency on the part of the banking industry, retailers, law enforcement or indeed customers themselves.”

Melanie Johnson, chairwoman of the UK Cards Association, said: “The cards industry is greatly encouraged by the major decrease in card fraud losses for a second successive year, but we will not be easing off our efforts as a result.”