Guardian: Chip and pin helps push bank and credit card fraud to £ 505m

Chip and pin helps push bank and credit card fraud to £505m

Miles Brignall Tuesday March 8, 2005 The Guardian

Bank and credit card fraud rose 20% last year, costing British banks £505m, with part of the increase due to the introduction of new chip and pin cards.

Apacs, the clearing payments association that compiled the figures on the banking industry's behalf, said the amount stolen using bank cards rose from £420.4m in 2003 to £504.8m in 2004.

Fraud on cards stolen before the genuine cardholders receive them grew sharply - up 62% to £72.9m - as criminals took advantage of the unusually high number of cards sent out due to the rollout of new chip and pin cards. In 2004, 100,000 replacement cards were sent out each day. Overall, fraud at British cash machines grew 81% to £74.6m.

Card-not-present fraud - consumers buying goods over the internet and telephone - continues to be the biggest fraud type, rising 24% last year to £150.8m. Apacs said online credit card payments have increased five-fold since 1999, reaching 10% of all credit card spending.

Thefts using skimmed or cloned cards - favoured by criminal gangs - rose 17% to £129m last year, while the amount bought using lost and stolen cards rose just 2% to £114.4m.

Despite a number of recent scare stories, Apacs said identity theft remains a small proportion of overall fraud. It rose 22% to £36.9m in 2004.

Sandra Quinn, director of corporate communications at Apacs, said: "When the banking industry decided to introduce chip and pin in the UK our fraud forecasts showed that without it card fraud losses would top £800m by 2005.

"So while we still have a battle on our hands, we are on track to see a significant reduction in this amount."

For the first time, Apacs has calculated total losses for online banking fraud, which it said reached £12m in 2004. Fraud loss overseas was the only area to fall - down 11% to £92.5m.

· More than £16m was paid out last year in rewards to shop staff who retained cards they suspected were stolen.

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