March 19th 2014
– Card fraud rises in 2013, but still represents only 7.4p for every £100 spent.
– Consumers and online businesses urged to install security software to protect themselves from ‘malware’ viruses.
– Deception crimes – including ‘vishing’ – continue to be a threat.
– Cheque fraud and telephone banking fraud fall by 22% and 8% respectively, with modest 3% rise in online banking fraud.
New figures released by Financial Fraud Action UK (FFA UK) show that levels of card and online banking fraud rose during 2013.
Improved fraud detection and prevention systems used by banks and established internet retailers continue to have a positive impact, but intelligence suggests that criminals are now targeting individual consumers and small businesses – driving the recent reported losses. While consumers are warned to be vigilant, they continue to enjoy strong legal protections against bearing any personal losses – meaning online shopping remains relatively safe and secure.
Fraud losses on UK cards totalled £450.4 million in 2013, a 16% rise on the total in 2012 of £388.3 million. This figure is still down 26% since fraud was at its peak in 2008. At the same time, total spending on all debit and credit cards reached £532 billion in 2013, a rise of 6.1% on 2012, with 10.9 billion transactions made in the year. Overall, card fraud losses as a proportion of the value of purchases on our cards has increased only slightly – from 7.1p for every £100 spent in 2012 to 7.4p in 2013 (in 2008 it was 12.4p for every £100). The total number of all transactions rose by over half a billion between 2012 and 2013. Losses on remote card purchases (those made online, over the telephone or by mail order) increased by 22% to £301.1 million in 2013, from £246.0 million in 2012.
The UK is Europe’s leading online shopping economy, with spending by British consumers online growing by 16% in 2013 to reach £91 billion. Card payments are the main driver of this growth as they provide the most effective way to pay online. Debit and credit cards also offer consumers protection against fraud. Online fraud against UK retailers totalled an estimated £105.5 million in 2013, a rise of 4% on the previous year. However, there has been a substantial increase in fraud against online retailers based overseas, rising 48% to an estimated £57.8 million. Enhanced card security features, such as Chip & PIN, as well as advanced real-time fraud screening techniques employed by banks and established internet retailers, have forced criminals to change tactics. As well as tricking customers into handing over personal and financial details (including cards and PINs), for example over the telephone while posing as officers from the bank or the police, fraudsters are also increasingly using digital attacks, such as malware and data hacks, to compromise card details. It is believed criminals are using these stolen details to commit fraud by targeting those online retailers which have not yet adopted security measures put in place by more established firms.
In order to help tackle this trend, experts and the police are urging consumers and online businesses to install security software, often freely available from a customer’s own bank. To prevent stolen card details being used to make purchases online, retailers are being advised to take steps to improve their security, including use of the online protection (including American Express’ ‘Safe Key’, ‘Verified by Visa’ and MasterCard’s ‘SecureCode’) and by following the prevention tips listed below.
The card fraud figures are also a reminder to consumers to be vigilant against scams. Losses due to fraud on lost or stolen cards increased by 7% to £58.9 million from £55.2 million in 2012, with distraction thefts in shops and bars and shoulder surfing at ATMs highlighted.
Meanwhile, ‘vishing’ over the telephone, with fraudsters tricking consumers into parting with personal or financial information, has been identified as a driver for the 14% rise in card ID theft to £36.7m from £32.2m. In response, the industry is highlighting to consumers the ‘golden rule’ that the bank and the police will NEVER phone or email customers asking for their PIN or full online banking codes, or visit their home to collect a bank card.
Online banking fraud has increased by 3% to £40.9 million from £39.6 million in 2012. Intelligence shows this increase has also been driven by the rise in ‘vishing’ and malware. Fraudsters are increasingly targeting business customers rather than personal accounts due to the prospect of a potentially higher return.