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Deception crimes drive small increase in card fraud and online banking fraud losses

September 2012

Card fraud losses as a proportion of the amount we spent on our cards decreases – from 0.066% during January to June 2011 to 0.063% during the first half of this year

Payment fraud losses are only half a per cent of all fraud losses in the UK

Figures suggest fraudsters bypassing security safeguards by duping consumers into handing over their own details – industry redoubles efforts to support vulnerable customers

New figures released today (27 September 2012) show that basic frauds, such as distraction thefts and people being tricked into giving their cards, PINs and financial passwords to criminals, have contributed to a small overall increase in card fraud and online banking fraud losses. Cheque fraud losses have also increased, but phone banking losses have fallen by a fifth.
According to The UK Cards Association, total fraud losses on UK cards totalled £185.0 million between January and June 2012. This is a 9 per cent increase on losses in the first half of last year (£169.8 million), but represents a fall of 39% from the total of £304.2 million in the first half of 2008 when fraud was at its peak. Additionally, card fraud losses as a proportion of the amount we spent on our cards has actually decreased – from 0.066% during January to June 2011 to 0.063% during the first half of this year. With technology such as chip and PIN helping to deter fraud, criminals have turned their attention to more straightforward ways of getting hold of people’s cards and PINs. This includes distracting people in shops or at cash machines and then stealing their cards without them noticing, as well as simply tricking them into handing over their cards and PINs on their own doorstep. For example, elderly customers are called by someone claiming to be from their bank and then being told that their debit or credit card needs collecting. From there, they are asked to key in their PIN, following which a courier is sent by the fraudster to collect the card. Four-fifths (80%) of consumers surveyed earlier in 2012 felt anyone could be a potential victim to this fraud, which police warn is on the increase.

As consumer awareness of these scams can help prevent these losses, the industry launched two public awareness campaigns earlier this year.

These advised cardholders to follow simple steps to protect their cards and card details, urging them to be on their guard if they receive phone calls or emails out of the blue from someone claiming to be from their bank or the police. A customer checklist of ways in which consumers can protect themselves from these forms of deception is provided following the detailed break-down of fraud figures.

Online banking fraud losses totalled £21.6 million during January to June 2012 – a 28 per cent increase on the 2011 half-year figure. This has been driven by a huge increase in the number of phishing websites set up by criminals as part of a scam to trick customers into visiting these fake websites and disclosing their online banking login details. Losses in this area also reflect the trend in card fraud, with deception scams resulting in increases. Online banking customers are being tricked into divulging their online login details and passwords over the phone to someone they believe is from their bank but is actually a fraudster.

Phone banking fraud losses fell to £6.7 million (a 21 per cent decrease) during January to June 2012. This reduction is partly down to the fact that criminals are focusing their efforts on fraudulently accessing accounts online rather than over the phone.

Cheque fraud losses increased from £16.4 million in the first half of 2011 to £17.9 million during the same period in 2012. Although this is a nine per cent increase, the overwhelming majority of this type of fraud is stopped before the cheque is paid. In fact, £241.3 million of attempted cheque fraud was spotted and stopped during the clearing process in the first half of this year.

Fraud figures released by the National Fraud Authority (NFA) earlier in the year put these industry payment fraud losses into perspective. The NFA estimates that fraud in all its guises cost the UK more than £73 billion a year – card and banking fraud only accounts for just over half a per cent of this figure. Furthermore, in the UK - unlike many other countries outside Europe - innocent victims of any type of payment fraud on their debit or credit card or account are legally protected from financial loss.

DCI David Carter, Head of the Dedicated Cheque and Plastic Crime Unit (DCPCU), the special police squad which is sponsored by the banking industry and has an ongoing brief to help stamp out organised payment fraud across the UK, said:

“This increase is due to organised criminal gangs committing straightforward frauds, and our focus remains on targeting those responsible and bringing them to justice. And given this rise in old fashioned crimes – criminals using distraction techniques and duping people into disclosing their passwords and online banking details - we are urging everyone to be on their guard and work with us to help stop this criminal activity. Your bank or the police will never cold call you or email you and ask you for your full login details, cards or PINs. If anyone does, hang up the phone or delete the email.”

To see the full press release including half-yearly plastic card fraud losses on UK-issued cards January to June 2008 to January to June 2012, please click in the link below.

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