Shoppers give the cold shoulder to fraudsters

Clare Francis looks at new initiatives to beat credit card crime

With only 15 shopping days left until Christmas, a frenzy of spending on the high street is inevitable. But this also means rich pickings for fraudsters, who will be out in force over the next few weeks.

With only 15 shopping days left until Christmas, a frenzy of spending on the high street is inevitable. But this also means rich pickings for fraudsters, who will be out in force over the next few weeks.

Figures from the Association for Payment Clearing Services (Apacs) reveal that credit card fraud rose by 50 per cent in the year to September, and instances of fraudulent transactions cost the banking industry £373m.

One scam to watch out for is "shouldering". The thief looks over your shoulder as you type in your PIN number at an ATM, then distracts you by pretending you've dropped some money. As you bend down to pick this up, your card is snatched out of the machine and used to withdraw cash elsewhere.

Counterfeiting accounted for £138m of the £373m lost last year on credit and debit cards. The most common method of counterfeiting is "skimming": the magnetic strip on the back of a credit card is swiped through a machine that stores the details, enabling the card to be copied. This is most likely to happen in bars and restaurants but it should become less of a problem over the next few years, as Visa and Mastercard have been working with card providers to introduce fraud-proof chip cards. There are already 20 million chip cards in the UK; the aim is for all credit and debit plastic to have chips by 2005.

A new PIN system will also enhance security. Instead of signing their name when they make a purchase, cardholders will have to tap in a four-digit PIN number.

From Tuesday, Cahoot customers will be able to take advantage of another new service, the webcard, which should make shopping over the internet more secure. Although many websites guarantee security and most credit card providers will refund you if your card details are used fraudulently, figures from Cahoot indicate that about 3 per cent of people with a credit or debit card have been victims of online fraud. Many people are still reluctant to input their credit details on a website, even though this is safer than giving them to a stranger on the end of the phone.

Cahoot's webcard is designed to store credit and debit card details and protect online shoppers. The webcard is downloaded on to your personal computer and appears as a symbol in the corner of the screen. When you make a purchase, you give the retailer a unique 16-digit number, which looks like a credit card number but is valid only on that occasion (you get a different number every time you buy online). The number would therefore be useless if someone intercepted it. The webcard also allows you to put a limit on the amount that can be authorised on the card, helping to prevent overcharging.

When you're present-shopping, follow these simple precautions to protect your cards and cash:

* Try not to make cash withdrawals in busy areas of town, late at night or when carrying lots of heavy shopping.

* Never write down a PIN number.

* Keep your card in sight at all times. If you are suspicious about the behaviour of the person handling your card, report this to the issuing bank.

* Report lost or stolen cards to the bank immediately.

* If shopping online, use retailers whose names you recognise. Read the terms and conditions, and keep a record of transaction details.

* Always check your statements and call the bank if there are any transactions you can't account for.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

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