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7th October 2011

UK card and banking fraud down again

Card and banking fraud fell for the first six months of the year in the UK.


Card fraud was down for the third successive year with an overall fall of 9% to £170m (€197m $262m ¥20.1bn Y1,673m compared with the year ago period and down 44% on the 2008 first half figure. Much of this can be attributed to the introduction of 'chip and pin' across Europe and in ATMs. Tighter card company protocols linked to mobile card terminals so the waiter / assistant does not have to take the card away from the cardholder is perhaps the reason for UK retailer POS transaction fraud dipping by a third. As it becomes more difficult to clone cards there has been an increase in fraud from lost or stolen cards. There have been more cards stolen near POS terminals by distracting customers and more people deceived into handing over the cards thinking the person taking the card is either a bank official or police. Some card issuers still don't believe the cost of more secure delivering of cards and authentication following is worth the expense with the cost of mail non-delivery fraud up 42%, though at £5.4m is not of too great a concern to the issuers.


In banking fraud there is a divide with online banking fraud down by 32% whilst phone banking fraud is up 48%. The online fall is thought due to the increased use of token devices as secondary authentication and higher usage of security software by customers on their computers. Phone banking fraud rose to £8.6m, and while a relatively small amount of money for the areas is likely to be heavily targeted for reduction by the banks. Aside from the financial cost banks have received bad publicity due to some high visibility 'blagging' incidents where persuasive individuals have managed to convince bank staff to hand over financial details concerning high profile individuals. Cheque fraud was up 17% to £16.4m, making it as financially significant as online banking fraud. For the banks to have had to pay out on this would suggest that the causes were either through mail non-receipt of cheque books and / or that signatures did not match. At the end of the period in question the Cheque Guarantee Card scheme was ended. This might be expected to create a small further increase in cheque fraud as the few retailers who accept cheques and previously would have asked to view the card and note the number will no longer be able to do so.


In summary:

 
- Total Card fraud £186.8m -9%
- Online Banking Fraud £16.9m -32%
- Phone Banking Fraud £8.6m +48%
- Cheque Fraud £16.4m +17%