Financial Fraud Action UK announces latest fraud figures

  • Card fraud losses down 23% to £232.8m in first half of 2009 (compared with same period last year)
  • First ever fall in card-not-present fraud losses
  • Online banking fraud losses up 55% to £39m
  • Cheque fraud losses down 26% to £15.6m

Financial Fraud Action UK, the voice of the industry for financial fraud matters, (previously known as APACS3) today (7 October 2009) publishes the latest payment industry fraud losses for the first half of 2009, in conjunction with The UK Cards Association and the Cheque and Credit Clearing Company.

Card Fraud Type on UK issued credit and debit cards

Jan to

June

2006

Jan to

June

2007

Jan to

June

2008

Jan to

June 2009

+/- (08/09)

Phone, internet and mail order fraud (Card-not-present fraud)

£95.3m

£137.0m

£163.9m

£134.0m

-18%

Counterfeit fraud (skimmed/cloned)

£52.8m

£72.3m

£88.8m

£46.3m

-48%

Fraud on lost or stolen cards

£36.1m

£30.7m

£26.8m

£25.1m

-6%

Card ID theft

£15.0m

£18.7m

£19.5m

£23.9m

+23%

Mail non-receipt

£9.8m

£4.9m

£5.3m

£3.5m

-33%

TOTAL

£209.0m

£263.6m

£304.2m

£232.8m

-23%

Contained within this total:

 

 

 

 

 

UK retail face-to-face transactions

£42.1m

£37.5m

£47.3m

£34.8m

-26%

UK cash machine fraud

£39.5m

£17.1m

£20.9m

£20.3m

-3%

Domestic/International split of total figure:

 

 

 

 

 

UK fraud

£160.8m

£154.8m

£181.8m

£165.6m

-9%

Fraud abroad

£48.1m

£108.8m

£122.4m

£67.1m

-45%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The fraud to turnover rate on debit and credit cards amounted to 0.1 per cent in the first half of the year – reflecting the fact that only around a tenth of a penny is lost to fraud in every £1 spent on cards.

Katy Worobec, Head of Fraud Control, says:

“These latest fraud figures are good news but we know there’s no room for complacency. Whilst industry online security initiatives such as Verified by Visa and MasterCard SecureCode may be making their presence felt, the fraudsters are never going to shut up shop and, of course, there are emerging areas such as online banking fraud which has risen again.

“Although it’s difficult to prove, we think that one of the reasons for this dip in card losses may simply be as a result of fraudsters realising that they can prosper more by targeting foreign-issued cards – particularly those without chip and PIN protection and which currently have stronger currencies than sterling. The fact that we’ve seen a 36 per cent increase in the first half of this year in the amount of fraud being committed on foreign issued cards here in the UK adds some weight to this theory.”

The Dedicated Cheque and Plastic Crime Unit (DCPCU) - the special police unit sponsored by the banking industry to stamp out organised card and cheque fraud across the UK – has certainly played its part in the encouraging fall in card fraud. In the first half of the year, conservative estimated savings to the industry as a result of their fraud prevention work amounted to £12.8 million. This is on top of the £315 million in fraud savings to the industry as a result of the Unit’s work since its launch back in 2002.

Various other factors have contributed to the fall in the card fraud figures. Chip and PIN has undoubtedly continued to make it more difficult for fraudsters to commit fraud on our cards in the UK and, as a result: losses at UK retailers are down by 26 per cent from the same period last year; mail non-receipt fraud fell by 33 per cent; and lost and stolen card fraud is down by 6 per cent to its lowest level since the industry collation of fraud losses began in 1991. Additionally, the banking industry continues to work closely with the retail community to raise awareness of the ways in which retailers can protect their chip and PIN terminals from criminal attack.

Losses from phone, internet and mail order shopping fraud have fallen for the first time ever and now stand at £134 million. Reasons behind this decrease include the increasing use of sophisticated fraud screening detection tools by retailers and banks, as well as the continuing growth in the use of MasterCard SecureCode and Verified by Visa (online payment systems that make cards more secure when shopping on the internet), by both online retailers and cardholders.

There has also been a significant decrease in fraud abroad. One of the factors causing this is the fraud detection systems used by the banks and card companies, which monitor for unusual spending - meaning that potential fraud is stopped before it happens.

Online banking fraud losses totalled £39.0 million during the six months to June 2009 – a 55 per cent rise on the 2008 figure. The increase is largely due to criminals employing more sophisticated methods to target online banking customers through malware scams – which target vulnerabilities in customers’ PCs - rather than the banks’ own systems which have proved more difficult for the fraudsters to attack. There were also more than 26,000 phishing incidents during January to June 2009 – a 26 per cent increase on the amount seen in the same period last year.

The industry continues to raise awareness about the importance of having up-to-date anti-virus and anti-spyware software and is working closely with the Metropolitan Police Service Police Central e-Crime Unit (PCeU), which has been set up to co-ordinate the law enforcement approach to all types of e-crime, and provide a national investigative capability for the most serious e-crime incidents. Help and advice about preventing all types of online banking fraud is available at www.banksafeonline.org.uk.

Cheque fraud losses during January to June 2009 decreased from £21.2 million to £15.6 million. The overwhelming majority of fraudulent cheque payments get stopped before the cheque is paid, and the industry’s ongoing work to prevent cheque fraud coupled with the continuing decline in cheque usage is likely to have played a major part in the 26 per cent fall.


ENDS


For further information contact the Press Office on 020 7711 6316 / 020 7711 6251 / 020 7711 6340 or press@ukpayments.org.uk

Notes to editors:

1. Financial Fraud Action UK is the name under which the financial services industry co-ordinates its activity on fraud prevention, presenting a united front against financial fraud and its effects. It was launched on 6 July to replace the work carried out by APACS and is now the payments industry voice on fraud.  Financial Fraud Action UK (www.financialfraudaction.org.uk) works closely with The UK Cards Association on industry initiatives to prevent fraud on credit and debit cards.

2. The UK Cards Association is the leading trade association for the cards industry in the UK. With a membership that includes all major credit, debit and charge card issuers, and card acquiring banks, the role of the Association is both to unify and represent the UK card payments industry.  It is responsible for formulating and implementing policy on non-competitive aspects of card payments including codes of practice, fraud prevention, major infrastructural changes, development of standards and other matters where cross-industry benefits are identified.  The UK Cards Association was formed in April 2009 as the successor body to the APACS Card Payments Group.  More information about The UK Cards Association is available on www.theukcardsassociation.org.uk.

3. Since 6 July 2009, the payments industry has stopped using the name APACS in favour of names that better describe the different parts of the industry. The UK payments industry has a number of different schemes and separate industry groups including:

  • Bacs (which manages the Direct Debits and Direct Credits schemes)
  • CHAPS Co (which manages CHAPS Sterling and Faster Payments Scheme)
  • The Cheque & Credit Clearing Company (which manages the cheque clearing system in Great Britain and the systems for clearing paper bank giro credits and euro-denominated cheques)
  • DCPCU (the specialist, banking industry funded, police unit that is responsible for investigating serious and organised card and cheque fraud)
  • Financial Fraud Action UK (the name under which the financial services industry co-ordinates its activity on fraud prevention)
  • Payments Council (the organisation responsible for ensuring that payment systems and services work)
  • The UK Cards Association (the leading trade body for the cards industry in the UK)
  • SWIFT UK (a membership organisation representing the UK community of SWIFT users by co-ordinating views, forming a common UK policy and lobbying and influencing key stakeholders)
  • The UK Domestic Cheque Guarantee Card Scheme (providing a guarantee for personal cheques up to a certain limit; closing on 30th June 2011) 

4. Fraud losses on foreign-issued cards being used at UK-acquired retailers stood at £81.1m in the first six months of 2009, a 36% increase from the same time period last year when they totalled £59.7m.

5. Verified by Visa and MasterCard SecureCode are secure online payment systems that enable cardholders to authenticate themselves when shopping online at participating merchants through the use of a password. More information is available at www.becardsmart.org.uk.

6. Phishing incidents relate to the number of recorded phishing attacks on UK banks and building societies: each phishing incident typically involves fraudsters setting up a website that is a fake version of a genuine bank website, and then sending out thousands or even millions of spam emails trying to convince people to click on a link that will send them to that fake site. The objective is to fool people into then entering their online banking security information – such as user names, PINs and passwords – onto the fake site. There were 20,682 phishing incidents during January to June 2008 and 26,043 during January to June 2009.

7. Cards with an updated integrated circuit card verification value (iCVV) have been rolled out since 1 January 2008. These cards help tackle the type of fraud seen where fraudsters tamper with chip and PIN terminals to harvest card details and if one of these cards were compromised in this way, the data would be useless to the fraudster (i.e. a fake magnetic stripe card created via a compromise of this type would not work in a cash machine, even overseas in a non-chip and PIN country).

8. Advice to help avoid being a victim of fraud:

  • Don’t let your cards or your card details out of your sight when making a transaction.
  • Check your bank and card statements regularly and thoroughly – if you spot an unfamiliar transaction contact your bank or card company as soon as possible.
  • Destroy, preferably shred, any documents or receipts that contain personal financial information when you dispose of them.
  • Do not keep your passwords, login details and PINs written down.
  • Do not disclose PINs, login details or passwords in response to unsolicited emails or phone calls claiming to be from your bank or the police. Anyone who phones or emails and asks for your PIN is probably a fraudster.
  • When entering your PIN in a shop or a cash machine use your free hand to shield the number from prying eyes or hidden cameras.
  • Register your cards with Verified by Visa or MasterCard SecureCode.
  • Only divulge your card details in a telephone transaction when you have instigated the call and are familiar with the company.
  • Make sure you have your card company’s 24-hour contact telephone number with you – especially if you are travelling overseas - in case your card is blocked.
  • Make sure your card company has up-to-date contact details for you, including a mobile telephone number, so they can speak to you if they need to.
  • Make sure your computer has up-to-date anti-virus software and a firewall installed.
  • Access internet banking or shopping sites by typing the address into your browser. Never go to a website from a link in an email and then enter personal details.
  • Shop at secure websites by ensuring that the security icon (locked padlock or unbroken key symbol) is showing in your browser window.
  • Always log out after shopping and save the confirmation email as a record of your purchase.
  • Keep your chequebook in a safe place and report any missing cheques to your bank immediately.
  • Never accept a cheque or banker’s draft from someone unless you absolutely know and trust them.