March 14 2007

Fraudsters move to online retail

The overall value of fraudulent credit card transactions in the UK fell in 2006 but fraud levels online increased, according to banking association APACS. Card-not-present fraud, which includes internet, telephone and postal transactions, rose to £212.6m. This represents a 16% increase over 2005's figure of £183.2m.

The introduction of chip and PIN cards is having a positive impact on card fraud. Total fraud figures have decreased by 3% since 2005 and by a massive 47% in the high street where the cardholder has to be present. However, card-not-present fraud now accounts for nearly 50% of all card fraud losses.

Sandra Quinn, Director of Communications at APACS comments: "We are seeing fraud on transactions that do not use chip and PIN," such as online and in countries that have not yet fully upgraded to chip and PIN. "Fighting fraud is never going to succeed with a single-layered approach. It requires different sectors - including public and private - to work together on developing and implementing strategies, sharing best practice and, most importantly, sharing data."

A number of measures are in place to tackle card-not present and online fraud, such as automated cardholder address verification and card security code system, and MasterCard SecureCode and Verified by Visa.

APACS advises online shoppers to register with Verified by Visa and MasterCard SecureCode whenever they are given the option of doing so (cardholders simply register a private password with their card company for use when shopping online at participating retailers).

Attacks through online banking are also on the increase. Online banking fraud increased from £23.2 million in 2005 to £33.5 million in 2006, a rise of 44%. Phishing incidents rose to over 5,000 in the first six months of this year.

Card-not-present figures for the first six months of 2006 stood at £95.3million, an increase of 5% over the same period in 2005.

Emma Herrod