Credit Card Fraud 'Falls'

30 November -0001

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UK credit card fraud dropped for the first time in nine years during 2003, a survey has found.

According to market analyst Datamonitor, credit card fraud fell 5% to £402.4m last year, from £424.6m in 2002.

The introduction of chip and pin cards a system where customers verify a purchase by keying in a four-digit pin, should cut the figure further.

Datamonitor though on a cautious note warned it expected identity fraud to increase as criminals find new ways to target victims.

Report author Karina Purang said the efforts spent by the various players in preventing card fraud were paying off, adding that the introduction of new technology such as neural network systems which flag up transactions that do not match a cardholder's unusual spending behavior had also helped to curtail card fraud.

However, figures from the Association for Payment Clearing Services (APACS), showed the fall in fraud was "entirely" down to a reduction in the amount of fraud committed abroad on UK cards, UK, fraud is still rising "albeit at a slower rate", Datamonitor added.

Cardholder-not-present fraud surged to all time highs of £116.4m last year - up nearly 300% on the levels seen in 1999, with CNP, counterfeit and frauds on lost or stolen cards making up to 80% of total fraud losses last year.

Despite the introduction of new crime prevention methods, the UK still lags Europe on the fraud front, with 70% of all the fraud losses in Europe, accounted for by the UK.

In an effort to catch up with other countries and reduce credit card fraud, the roll out of the new chip and pin cards is expected to improve matters

The cards cut fraud by including a smart chip, which can store more information than the usual magnetic strips, and also by having users verify transactions by keying in a pin number rather than signing a receipt.

France pioneered the technology more than 10 years ago - reportedly cutting fraud by almost 50% following their introduction, Datamonitor said.

The new cards are becoming much more common with almost half of the UK's check-out tills converted to accept payments from the new cards.

Latest figures from the Chip and Pin Programme show more than 50 million new cards have been sent out to around 25 million of the UK's 42 million card holders.

While anti-fraud measures are improving, the report said UK consumers still faced dangers.

The UK has been successful in tackling fraud, but more can be done Datamonitor warned that with new measures making card fraud tougher, criminals had another trick up their sleeve namely identity fraud.

The lack of a national identity card had partly contributed to losses through this method of fraud jumping more than 44% to £29.7m last year.

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