That’s 14% - getting on for £40m – higher than the figure for 2007. That’ll do nicely, as they used to say in the ads for one well-known transatlantic card brand. The figures are up across the board, with the biggest increase from card cloning (up 22% to £88m) - although the largest single chunk of fraud remains the notorious ‘cardholder not present’ transactions required for phone and internet shopping, which was up 18% to £162m. Fraud committed abroad is also up – 11% to £121m. Anecdotally this seems entirely plausible – a straw poll of the staff here at MT Towers reveals that three out of five of us have been ripped off in the last year or so.
Overall, the figures are not good news for the costly and much-trumpeted introduction of chip and PIN card security in 2006. The only area in which much success can be claimed for this technology is in fraud from lost and stolen cards, down 11% to £27.3m.
To be fair, chip and PIN was only ever going to stand a chance of cutting fraud in-store, since it relies on the cardholder being there to enter their PIN. Other security – like the newly introduced and effectively compulsory Verified by Visa scheme – is needed to tackle online fraudsters.
Chip and PIN supporters claim that fraud would have risen even more sharply if it hadn’t been in place, and that the technology will become increasingly effective as it is rolled out in more countries.
That’s as may be, but when it comes to an IT arms race, the crooks can outmanoeuvre the card issuers every time. Fake cashpoint machines have been capturing card details and pin numbers for years, and only last month, police issued a warning that the problem has now spread to some corner shops and petrol stations. Even terrorists have been getting in on the action – Sri Lankan Tamil sympathisers have apparently been buying-up petrol stations with the sole intention of cloning shoppers cards to fund the ‘freedom fighters’ back home. Brings a whole new meaning to putting a Tiger in your tank.
Of course, the rise must in part be due to the increasing popularity of payment cards. Banks are very keen on us using cards whenever possible, partly because of the charge they levy on retailers for the privilege and partly because the alternatives – cash and cheques – are much more expensive for them to process.
But with the credit crunch already prompting cries of the imminent demise of free banking, how long before card issuers cotton on to the same idea and start passing the cost of fraud directly onto their customers?
In today's bulletin:
Mandy's back - and he means Business
UBS culls another 2,000 jobs
No crunch for card fraudsters
Editor's blog: Shining a light on banking's dark arts
Appealing to emotions, with YouTube