'Skimmers' in £150m credit card ripoff

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The Independent Online

When Gavin Brooks got his credit card bill he was, to say the least, stunned. According to the bill, he had spent substantially in the Netherlands. Except he was nowhere near the Netherlands when the sums were spent.

Mr Brooks, 64, is one of a growing number of victims of the latest credit card scam known as "skimming".

At a high-level conference in London last Friday, senior banking security experts and their police and Home Office counterparts met to discuss a problem that has reached epidemic proportions with an estimated cost of £150m a year.

They confirmed exclusively to The Independent on Sunday that they are so concerned about the problem that next year they will bring in credit card security measures from Europe. From next year, British consumers will have to enter a PIN code in place of their signature when they make credit card purchases.

Recent figures show that "skimming" now accounts for almost half of all illegal credit card purchases. Skimmers copy the magnetic tape on the back of every credit or debit card by passing it through a small electronic reader. The details are recorded and then transferred to a dummy card.

The reader itself is little larger than a cigarette packet and is worn on the belt like a pager.

Restaurant work is particularly popular with skimmers because the card is usually taken out of its owner's sight to be swiped elsewhere. In some restaurants, dozens of cards are copied each night.

Ian Spencer, head of fraud at Barclaycard, said: "This is a very serious problem. Card fraud is very much a focus for organised crime: it's happening internationally. It is being used to generate capital for hard crime, including drugs and prostitution."

A report by Professor Michael Levi of Cardiff University's Criminology Research Centre and Jim Handley, principal lecturer in occupational psychology at the University of Glamorgan, concludes that the thieves are growing more sophisticated. The report, presented to last week's conference, says more people are worried about card fraud now than mugging or robbery.

Using PIN numbers instead of signatures has proved remarkably successful in France, where the ratio of fraud losses to transaction volume is just 0.02 per cent. Banking security experts estimate that the French, who pioneered Smart card technology, are approximately 12 years ahead of the UK in the fight against credit card fraud.

Friday's meeting also heard that the rise in skimming was part of a worrying trend in credit card fraud. At the beginning of the 1990s, plastic card fraud stood at around £165m per annum but dropped to just over £83m in 1995. Since then, however, there has been a consistent, year on year rise in the absolute amount of fraud losses on payment cards, peaking at £293m in 2000. Last year's figures, shortly to be announced, are expected to show that this total has now reached £405m.

A Barclaycard spokesman said yesterday: "We are sorry about Mr Brooks' experience. Skimming is a growing trend but we can assure him that we are doing everything in our power to fight it."