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14% rise in card fraud - but chip & pin is working

Credit and debit card fraud increased by 14% during 2008 as criminals found ways of bypassing the chip and pin system, figures reveal. Losses on plastic cards totalled £609.9 million during the year, up from £535.2 million in 2007, according to payments group Apacs.

It said the main areas of fraud were transactions which did not use a card's chip and pin, such as using a card to buy goods over the internet, telephone or by mail, as well as counterfeit cards being used abroad in countries that do not yet have the chip and pin system in place.

So-called "card not present" fraud rose by 13% during the year to £328.4 million, to account for more than half of the total. Counterfeit card fraud increased by 18% to £169.8 million, although the rise was well down on 2007's 46% jump in losses.

Apacs said tackling both of these frauds is a priority, and it is continuing to put pressure on countries such as the United States, where chip and pin has not yet been rolled out, to introduce it. The industry is also encouraging cardholders and retailers to use secure online payment systems provided by MasterCard and Visa.

Apacs said the rise in card not present fraud should be seen in the context of the huge increase in transactions carried out over the internet and by telephone. Card not present fraud losses have risen by 243% between 2001 and 2008, but during the same period the value of online shopping transactions has soared by 524%.

Fraud losses on cards as a result of identity theft increased by 39% during the year to £47.4 million, but there was a 4% drop in fraud on lost and stolen cards to £54.1 million - the lowest level since the industry began to collate the figures in 1991.

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