News & Views - Savantor

The Fraud Industry

Thursday, 15 March 2007

The latest fraud figures released by APACS show total card fraud losses fell by three per cent in the past year to £428m – a decrease of nearly £80m over the past two years. This fall has been driven by a 13 per cent decrease in UK domestic fraud and the combined reduction of more than £45m in mail non-receipt and lost and stolen fraud.  But over the same time period, card-not-present fraud losses have increased by 16 per cent and now account for just under 50% of all card fraud losses. To put total fraud losses further into context, however, losses as a percentage of plastic card turnover equated to 0.095% in 2006 – significantly less than the 0.141% figure in 2004.

In the past year APACS has extended its fraud reporting beyond cards to include other payment industry fraud losses, including fraudulent encashments - the fraudulent withdrawal of cash over a branch counter and losses due to forged instructions - fraudulent requests to transfer funds from a bank account. . These non-card related payment fraud losses in total amounted to £72.2m in 2006. Contained within this figure are online banking fraud losses (the majority of which were forged requests), which totalled £33.5m in 2006. This is an increase of 44% year-on-year and has been driven by an increase in phishing incidents, which went up from 1,713 in 2005 to 14,156 last year.

FDI have also released a fraud study carried out across the EU which highlights the fact that fraud is perpetrated on a global stage, learned and passed from one part of the world to another. Apparently Banks' efforts to combat fraud are constrained by concerns about the customer experience and their own competitiveness. Data protection legislation is seen by many banks as a significant barrier to industry co-operation although this may be more perception than reality.  Significantly there is also a belief that retailers could do more to prevent fraud but are not motivated to do so as they do not suffer loss.  Maybe in the light of the T K Maxx issue this may change as we clearly need the cooperation of all parties to combat the increasing ability of fraudsters to operate as global franchises.

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