Fraud carried out on credit and debit cards is expected to have topped £600m for the first time last year, when banking industry figures are released this week. Despite the introduction nearly five years ago of chip-and-pin security technology, at a cost of hundreds of millions of pounds, the tide of fraud is rising ever higher.
A British credit or debit card gets fraudulently used or counterfeited once every seven seconds, industry figures show. And Apacs, the UK payments service, is expected to say this week that card fraud rose again in 2008, this time by more than 10 per cent to around £600m. This compares to £535m for the whole of the previous year.
But Sandra Quinn, a spokeswoman for Apacs, says that following the introduction of chip-and-pin – where users have to verify their purchases by inputting a personal identification number into till-side terminals – organised gangs of criminals have been turning to what is called "card not present" fraud.
"As the name suggests, this means that the fraudster uses a stolen card number on the internet or by mail order," she says. "This is less risky as they don't have to physically go to a shop to hand over a counterfeit card."
A substantial proportion of fraud on UK cards has taken place overseas. "Card numbers are acquired in the UK by criminal gangs and then used overseas to buy goods. Card fraud is a truly global undertaking and so increasingly is the fight against it," comments Steve Head, chief superintendent at the City of London Police economic crime unit.
Several "hotspots" for card fraud have been identified, such as the US, Canada and the Far East, but in recent times gangs have emerged in Australia and China, all preying on British card customers.
The banks say they have stepped up their fight against the card fraudsters. "It is difficult to pursue some of these gangs because they are located overseas in a different jurisdiction and they use the internet to commit their crimes," explains the leader of an anti-fraud unit working for one of the UK's major high-street banks, who wished to remain anonymous. "However, generally, we are getting better at spotting frauds earlier and they are getting away with less per transaction as a result."
Although it is usually the banks and retailers that pick up the tab for card fraud, Ms Quinn says consumers lose out too: "Having your card details stolen and used can be worrying and create a lot of hassle. What's more, people are increasingly finding that when they are on holiday abroad, their cards are being stopped for security purposes."
DON'T LET THE CROOKS STEAL YOUR MONEY. TEN TIPS FOR PLASTIC SAFETY
Being ripped off by fraudsters is traumatic. But you don't have to become a victim. Just follow these 10 simple steps to secure your credit and debit accounts.
1. Protect your PIN. Shoulder surfing is a common way for thieves to work out your code, simply by looking over your shoulder. It's vital to shield the PIN pad from prying eyes everywhere from the cashpoint to the supermarket checkout. It's also worth taking a look over your shoulder as you go to pay or withdraw cash. If someone is standing too closely behind you, simply ask them to step back.
2. Look for anything unusual at cash machines. With their enclosed sides, the hole in the wall can make us feel secure, but there is widespread evidence of fraudsters tampering with machines. This often involves placing a false card reader over the card slot, or even a false front over the entire machine which reads your card details as you insert it. A tiny camera positioned above the key pad records your PIN, and criminals have all the details they need. Don't use the machine if you suspect a problem, and shield your PIN at any cashpoint. Where possible, use machines inside bank branches.
3. Don't abandon your card. If it is swallowed by a machine, or you are asked to input your PIN more than once, the machine could have been compromised to take your card. The criminal can then simply walk up and take your plastic after you leave. If you can, stay in place and call the helpline number that should be displayed on the machine.
4. Cancel your card immediately if it is lost or, of course, stolen. Even if you know what has happened to it and don't feel it could be used, a relaxed attitude is not worth the risk. Once you've notified your card provider, it will stop any further transactions on your card, cancel it and arrange for a new one to be issued.
5. Don't write down your PIN. A new credit or debit card should arrive separately from the notification of your PIN to reduce the likelihood of it being stolen and used while in transit. If your card is delayed, check its progress with your provider. It is tempting to keep a note of your PIN when it does arrive to help you remember it, but card providers strongly discourage this. If it is necessary, record the PIN away from the card, and certainly not in your wallet or purse.
6. Always shred or burn all personal documents. Fraudsters are well known for searching through bins for personal details which they can then use to apply for cards and loans posing as you.
7. Keep your card in sight at all times. Handheld chip and PIN machines are now in use throughout the UK and in many international destinations, so there is little need for your card to be taken away for a transaction. Try to insist on this, but if it is absolutely necessary for the plastic to be read elsewhere, go with it to complete a transaction. Fraudsters can use a technique called skimming to scan and duplicate the information on your card in a matter of seconds.
8. Beware of unsolicited electronic mail. Fraudsters use "phishing" emails to dupe people into disclosing personal information by appearing to be from their bank or building society, even providing a link to a false site that looks identical to the original. Your bank has your details and won't ever ask for them all, If you do receive an email that seems to be from your bank, go to the website independently without using the links, or call the bank to check any requests.
9. When shopping online, try to stick to well-known brands or sites. Look for secure websites when you buy, with the padlock symbol and an https://... address rather than http://.... Visa and Mastercard also offer protection from unauthorised transactions via the Verified by Visa or Mastercard Securecode scheme. Visit their websites for further information.
10. Finally, never inform anyone else of your PIN or let them use your card – however much you might trust them.