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Customers urged to be vigilant as fraudsters increase scam attacks

  • Card fraud rises, but as a proportion of spending remains flat at 7.4p for every £100 spent during first half of 2014
  • Rise in remote banking fraud losses as criminals target businesses and consumers through telephone ‘Vishing’ and computer viruses
  • Banks highlight warning signs of scams, and support calls made by City of London Police Commissioner for national awareness campaign

New figures released today [12 September 2014] by Financial Fraud Action UK (FFA UK) show that card and remote banking fraud increased during the first six months of 2014. The intelligence behind the figures reinforces recent trends, which have seen the growth of deception crimes seeking to persuade consumers to part with their personal and financial information, as well as criminals’ use of computer viruses. As a result, customers are being warned to be vigilant and be aware of the key warning signs of scams.

Fraud losses on UK cards totalled £247.6 million between January and June 2014, an increase of 15 per cent from £216.1 million during the same period in 2013. Fraud as a proportion of card purchases has remained flat at 7.4p for every £100 spent, the same proportion as the industry reported at the end of 2013.

Losses on remote banking fraud rose to £35.9 million, up 59 per cent from £22.6 million in 2013. Within this total, online banking fraud losses rose to £29.3 million, up 71 per cent from £17.1 million in 2013. Telephone banking fraud rose to £6.6 million, up 20 per cent from £5.5 million. Intelligence suggests criminals are targeting business accounts which typically allow higher value fraudulent transactions.

Losses due to remote card purchases (those made online, over the telephone or by mail order) rose to £174.5 million in the first six months of 2014, up 23 per cent from £142.0 million in the same period in 2013. Within this total, the e-commerce fraud loss is estimated to be £110.0 million, up 23 per cent from an estimated £89.5 million in the first half of 2013.

While significant, this rise needs to be viewed in context of the increase in internet shopping by British consumers, with spending up from an estimated £40.5 billion in the first half of 2013 to an estimated £47 billion in the same period in 2014, according to IMRG [1]. Card payments are the main driver of online spending growth as they provide the most effective way to pay online.

A key driver for the rise in fraud losses has been the growth of deception crimes aimed at individuals and businesses. A combination of Chip and PIN and advanced fraud screening detection processes used by the banks drove a long-term decline in card fraud up to 2012. This is illustrated by the 72 per cent decline in high street fraud losses between 2004 and 2013. In response, fraudsters are increasingly concentrating their efforts on obtaining personal and financial details from individual customers rather than attacking the security systems used by the banks.

An increasing problem has been criminals telephoning people at home while posing as the bank, police or representatives of other trusted organisations, such as Government departments. These cold-calls typically involve the fraudster tricking their victim into revealing personal or financial information, such as their 4 digit PIN or online banking details; transferring money to another account; or accepting a courier into their home to pick up their card.

Once details have been compromised, they are then used to commit fraud through both remote (telephone or online) banking channels and through shopping online. Commonly, fraudsters target retailers who have not introduced adequate internet shopping protections.

Research conducted by ICM for FFA UK showed that a quarter (25 per cent) of customers do not take steps to challenge the identity of a cold-caller, with this figure rising to 34 per cent of 18-24 year-olds [2].

To stop these scams, police and fraud experts are highlighting the key warning signs:

Your bank will never:

  • Call you and ask for your 4 digit PIN or your FULL online or telephone banking security codes over the phone.
  • Ask you to withdraw money to hand over to them, or to transfer money to another account, even if they say the account is in your name.
  • Come to your home to collect your cash, payment card or cheque book.
  • Ask you to purchase goods using your card and then hand them over for safe keeping.

Intelligence also shows criminals are using computer viruses to steal personal and financial information, which is then used to commit fraud. FFA UK strongly endorses the call to action by the National Crime Agency last month for consumers to download and update their security software. Free software is often available for customers to download from their banks’ website.

Distraction thefts in shops and at ATMs have been identified as a driver of fraud on lost or stolen cards, which has increased by 3 per cent to £29.2 million from £28.2 million in the first half of 2013. Meanwhile, mail non-receipt fraud has increased 10 per cent to £5.0 million, up from £4.6 million, with fraudsters targeting multiple occupancy residences to intercept cards and personal details from post boxes.

Counterfeit card fraud rose by 4 per cent in the first 6 months of 2014 to £24.2 million, up from £23.3 million in 2013. The key driver for this modest rise is that stolen card details in the UK are being used to create counterfeit cards for use overseas in countries which have not yet implemented Chip and PIN.

Fraud on contactless cards continues to be negligible at £51,000 over the first six months of the year, which is just 0.007 per cent of contactless card spending.

Cheque fraud losses fell 34 per cent to £10.5 million in the first half of 2014, from £15.8 million in January to June 2013. The continued success of improved fraudulent cheque detection methods and enhanced prevention controls is the driver for this long-term decline.

The industry is tackling fraud through enforcement, information sharing, technological advances and awareness campaigns. The industry fully sponsors a specialist police unit, the Dedicated Cheque and Plastic Crime Unit (DCPCU), which identifies and targets the organised criminal gangs responsible for payment fraud. Since its inception in 2002, the DCPCU has achieved an estimated £800,000 a week in savings from reduced fraud. Through FFA UK, the card and retail banking industry securely shares intelligence on emerging threats and identifies patterns in fraud which protect consumers and strengthen the industry’s defences. Banks use a range of increasingly sophisticated fraud screening detection tools to prevent fraudulent transactions. FFA UK will shortly be launching a ‘vishing’ awareness initiative aimed at increasing customer vigilance of the scams.

Detective Chief Inspector Perry Stokes, Head of the Dedicated Cheque and Plastic Crime Unit, said:

“Be very suspicious of phone calls, texts or emails which come out of the blue asking for personal or financial details, regardless of who they claim to represent.

“Be aware of the warning signs: your bank will never ask you for your 4 digit PIN, to transfer or withdraw money, or to give your card to a courier. We are asking members of the public to pass this information on to any family and friends who may be unaware, and echo calls made last week by the Commissioner of City of London Police for a national awareness-raising campaign led by Government.”

To see the full figures, please click on the PDF link below.

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