Fraud losses drop on UK cards, cheques and online banking

Banking industry initiatives are successfully keeping fraudsters at bay as card fraud losses reach their lowest level since 2000, according to research published today (Wednesday March 09).

The level of fraud on cards fell to £365.4 million 2010, down from all time high in 2008 of £610 million, the figures show. This is the lowest annual total since 2000 and follows on from a fall of 28% in 2009.

Experts say that this current downward trend is due to the banking industry's ongoing investment to deter, detect and prosecute fraudsters.  Initiatives include: better awareness amongst retailers about how to protect their chip and PIN equipment from criminal attack; greater sign-up to online fraud prevention initiatives such as MasterCard SecureCode and Verified by Visa by cardholders and retailers; improved industry sharing of fraud data and intelligence; increasing use of fraud detection tools by banks and retailers; the increasing roll-out of chip and PIN abroad and the upgrade of chips on UK cards.

Online banking fraud losses totalled £46.7 million in 2010, a 22% fall on the 2009 figure. Factors contributing to this fall include customers better protecting their own computers with up to date anti-virus software combined with banks' use of sophisticated fraud detection software. This decrease has occurred despite a continuing rise in phishing attacks, up 21% from 2009.

However, phone banking fraud losses totalled £12.7 million during 2010, an increase of 5% from 2009. Most losses involve customers simply being tricked into disclosing their personal security details through cold calling or fake emails which the criminal then uses to commit fraud. This suggests that some customers are still not aware that their bank will never cold call or email them to ask for login details and passwords.

Cheque fraud losses decreased from £29.8 million in 2009 to £28.9 million during 2010. The vast majority of attempted fraud gets stopped before the cheque is paid. The industry's ongoing work to prevent cheque fraud has helped drive these losses down. The continuing drop in cheque usage has also contributed to the three per cent fall in overall cheque fraud losses.

‘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,’ warned Detective Chief Inspector Paul Barnard,  head of the Dedicated Cheque and Plastic Crime Unit (DCPCU), the industry sponsored specialist police unit that tackles the organised criminal gangs behind fraud.

'By taking simple steps, such as shielding your PIN with your free hand whenever you enter it, particularly at cash machines; being wary of unsolicited emails or calls; and making sure that your computers have regularly updated anti-virus software in place, we can make life harder for the criminals,’ he explained.

‘Fortunately in the UK, unlike some other countries, innocent victims of any type of payment fraud on their debit or credit card or account are protected and should not suffer any financial loss,’ he added.

Melanie Johnson, chair of The UK Cards Association, which represents UK credit and debit card providers said such a major decrease in card fraud losses for a second successive year is welcome.

‘But we will not be easing off our efforts as a result. It is essential to us that customers feel safe and secure when they use their cards and we will continue to invest in a wide range of fraud prevention initiatives to keep it this way,’ she added.

Fraud figures released by the National Fraud Authority (NFA) earlier in the year also serve to put these banking fraud losses into perspective. The NFA estimated that fraud in all its guises costs the UK more than £38 billion a year, card and banking fraud accounts for just over 1% of this figure.