News & Views - Savantor

Latest fraud figures

Friday, 17 July 2009

It's that time again when the media attacks chip and PIN technology for not solving the fraud problems it was never intended to solve. However, the latest figures do not make good reading so maybe it is time for issuers to look to introduce further technology changes to address the areas of fraud outside of counterfeit and lost and stolen. Card fraud cost the UK £610million last year - up by 43% in two years - and more than three quarters of all offences now involve internet, telephone or mail order shopping where EMV technology currently offers no protection.

The latest figures show there were a total of 2.8million fraudulent card transactions last year, up 4% year-on-year, and the proportion of cardholders who are victims has risen from 3.7 to 6.4% in the past three years.

  • Card not present fraud accounts for 77% of all incidents - almost 2.2million last year - and losses rose by 13% to £328million.
  • Counterfeit fraud rose by almost a fifth to £170million,
  • Identity theft rose by 39% to £47.4million.
  • Lost or stolen fraud fell from £68million to £54million since chip-and-pin technology went live in 2006.

Between 2001 and 2008, card-not-present fraud increased by 243% from £95.7million to £328.4million but over the same period the total value of on-line shopping in the UK increased by 524%, from £6.6billion to £41.2 billion.

There are potential solutions out there such as CardSwitch. This technology enables cardholders to put an electronic lock and key on their card accounts so when a cardholder decides that his card will not be used for any ATM transaction abroad, he can lock his card account. The same control can be applied to card-not-present transactions, out of country card payments and local ATM transactions. Cardholders can then unlock their card accounts for these types of transactions before they want to use their card and can specify particular limits, such as which countries the card will be used in via SMS. Whatever solutions banks decide on will be expensive to introduce but maybe it's time to bite the bullet – again.

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Sean Sheehan, Service Management Director - Bank of Ireland

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