Card fraud abroad increases following UK card protection clampdown

04 October 2007
Foreign card fraud has doubled as efforts in the UK to prevent fraudsters getting away with millions of pounds of consumers’ cash has forced them to head overseas to commit card crimes.

Figures released this week by APACS, the UK payments association have revealed that total card fraud losses increased by 26 per cent in the six months to June 2007 compared with the first half of 2006. However, domestic card fraud is down 4% and online banking fraud losses are down by an impressive 67%.

It appears that this increase is not down to crimes committed in the UK but a 126 percent rise in fraud on UK-issued cards being used overseas. In contrast, following the introduction of chip and PIN, domestic card fraud continues to fall, with losses at UK retailers down 11 per cent and losses at UK cash machines down 57 percent.

Sandra Quinn, Director of Communications at APACS, explains: “These figures show how the fraudsters have changed tack. A couple of years ago they were mainly stealing cards and card details for use in UK shops and cash machines, but today, because of chip and PIN, they have been driven overseas - using fake magnetic stripe cards specifically in countries which have yet to upgrade to chip and PIN. During the interim we will continue to use fraud intelligence systems to tackle overseas losses and encourage those countries that are lagging behind on chip and PIN to follow our lead.”

According to APACS figures, online, phone and mail order fraud has grown by 122 per cent while the fraud to turnover ratio on online card transactions has decreased – down from 0.7 per cent in 2004 to 0.5 per cent in 2006. These figures also take into account that the number of adults online shopping has shot up from 11 million in 2001 to over 28 million last year.

Mike Naylor, Personal Finance Expert at uSwitch.com, adds: “All banks in the UK have systems in place to spot unusual activity on customers’ accounts and, generally speaking, they will repay money lost through fraud. However, we can’t ignore the fact that ultimately consumers pick up the bill for fraud, albeit indirectly. Banks have to set aside money for these losses and much of this will be taken out of the fees and charges already in place.”

While it seems that the solution is completely out of the hands of the consumer there are several simple steps that can be taken to minimise opportunities for fraudsters including remembering to cover your PIN at cash machines and shops, shredding letters and statements before throwing them away.

Consumers are also being advised to take extra steps such as making sure that any dormant accounts are closed down and that all personal information given to financial providers is correct.

Learn more about identity fraud