UK credit card fraud as a whole dropped for the first time in eight years in 2003 from £424.6 million in 2002 to £402.4 million, according to the trade association for payments. But APACS warned that the fall was entirely due to a reduction in the amount of fraud committed abroad on UK cards, whereas for UK-based transactions there had been a slight increase.
Counterfeit card fraud – where a copy of a legitimate card is made – fell by 28% to £106.7 million, while fraud on lost and stolen cards dropped by 2% to £106.1 million. Much of this reduction, said APACS, was due to more sophisticated fraud intelligence systems that could track unusual cardholder spending patterns.
The introduction of chip and PIN, the system that replaces signatures with PINs for verifying
payments, will directly tackle both of these fraud categories. The rollout of the system is now well under way, with over eight million chip and PIN cards now issued.
The biggest fraud type is that of cardholder-not-present (CNP) fraud, which increased by 6% in 2003 to £116.4 million. But other areas are growing rapidly.
The largest percentage increase in fraudulent activity was in identity theft, which grew by 45% to reach £29.7 million, while fraud at UK cash machines grew by 34% to £39 million.
Sandra Quinn, director of communications at APACS, agreed that the reduction in fraud as a whole was encouraging but warned:
"The fraudster will always look for new avenues and that means we cannot be complacent. When plastic cards were first introduced in the 1960s it was never envisaged that they would be used to buy goods and services in an environment where neither the card nor the cardholder would be present. Criminals have used this fact to their advantage primarily by stealing people's card details through such techniques as skimming or 'bin raiding'. A number of initiatives are in place to clamp down on this type of fraud and as a result the growth rate of fraud where cardholders are not present is now decreasing."
She added that the chances of becoming a victim are still low and fraudulent transactions make up only 0.13% of all card transactions.