Scams and computer attacks contribute to an increase in fraud, as total card spending rises
- 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 today [14 March 2014] 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 safe and secure.
Fraud losses on UK cards totalled £450.4 million in 2013, a 16 per cent rise on the total in 2012 of £388.3 million. This figure is still down 26 per cent 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 per cent on 2012, with 10.9 billion transactions made in the year1.
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 per cent 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 per cent in 2013 to reach £91 billion2. 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 per cent on the previous year. However, there has been a substantial increase in fraud against online retailers based overseas, rising 48 per cent 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.
Malware is malicious software which is unknowingly downloaded onto a computer and which then enables fraudsters to steal personal or financial information or perform unauthorised actions on the device. 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.
Meanwhile, a major national campaign ‘Be Cyber Streetwise’ has been launched by the Government, supported by FFA UK and offers further advice that consumers and small businesses can adopt to protect themselves while shopping or banking online.3
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 per cent 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 per cent 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 per cent 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.
Telephone banking fraud has fallen 8 per cent to £11.6 million from £12.6 million in 2012. This fall has been as a result of tighter processes by banks which are designed to confirm customers’ identity.
Cheque fraud losses fell 22 per cent to £27.5 million from £35.1 million in 2012. Improved fraud detection methods used across the industry, including the digital analysis of cheques, has led to the considerable decrease.
Detective Chief Inspector Perry Stokes, Head of the Dedicated Cheque and Plastic Crime Unit, said:
“Whether in the real world or online, these latest fraud figures show just how important it is for consumers and businesses to know how to protect themselves against fraud. Always make sure you have the latest security software installed on your computer, so you can safely shop and bank online.
“Fraudsters can be extremely persuasive – do not be fooled. Your bank or the police will never call, visit or email you to request your PIN, collect your bank card, or ask you to transfer money to another account. Anyone attempting to do so is a fraudster.”
Annual fraud losses on UK-issued cards 2007 to 2013
Advice to consumers on how to take steps to avoid becoming a fraud victim:
- Ensure you have the most up-to-date security software installed on your computer, including anti-virus. Some banks offer free security software: check your bank’s website for details.
- Only shop on secure websites. Before entering card details ensure that the locked padlock or unbroken key symbol is showing in your browser.
- Always be suspicious of unsolicited emails that are supposedly from a reputable organisation, such as your bank or the tax office and do not click on any links in the email.
- Make sure you are the only person who knows the PIN for your card.
- Be aware: Your bank or the police will never phone, email or visit you to ask you for card PIN or to pick up your card. Never hand your card over to anyone who comes to ‘collect it’.
- Shield the PIN with your free hand whenever you type it into a keypad in a shop or at a cash machine.
- Check your bank and card statements for unusual transactions. If you spot any let your bank or card company know as soon as possible.
- Rip up or preferably shred statements, receipts and documents that contain information relating to your financial affairs when you dispose of them. Some banks offer paperless statements.
- When writing a cheque make sure you draw a line through all unused space on the payee line and the amount line to help prevent the cheque being fraudulently altered.
Advice to businesses on how to take steps to avoid becoming a victim of remote purchase fraud:
- Ask your bank or card processor about the online protection offered by card schemes, such as Verified by Visa, SecureCode by MasterCard and American Express’ ‘Safe Key’, which help make transactions over the internet safer from the threat of fraud.
- Know your customer: assess a customer’s profile, order and delivery details before accepting a transaction.
- Be wary of high value or unusual orders from customers you do not know, particularly if the product is easily resalable.
- Use the banking industry’s Address Verification Service, which compares the delivery address provided for the order with the billing address details for the payment card held by the card issuer.
- Maintain a record of fraudulent accounts and transactions to prevent further breaches – fraudsters will continue to attack businesses until the window of opportunity is closed.
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