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Banking fraud in the U.K. continues to increase


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October 1, 2008

According to the latest numbers from British banking association APACS, in the first six months of this year, on average, bank fraud losses were slightly under £302m, compared to over £263m in the corresponding period in 2007. This represents almost a 15 percent increase year-over-year.

Bank fraud losses abroad made up about forty percent of total card fraud losses exceeding £121.1m in the period, up eleven percent of the almost £109m lost in 2007. That loss was through tactics such as the use of counterfeit plastic cards with stolen PINs on ATM machines overseas that only check magnetic strips, not chips.

So-called Card-Not-Present fraud --a category that includes ecommerce fraud as well as phone and mail order scams-- also grew 18 per cent to reach almost £162m for the first six months of this year, according to APACS stats published today.

That type of fraud is now up a staggering 207 percent since 2001. However, over the same six month period, eCommerce transactions increased 415 per cent. These particular numbers, although hardly encouraging, are not quite as bad as they might first appear.

Due to be completed by 2010, and once the European banking industry meets its target on the roll-out of plastic cards and readers that rely on chip-based technology, this type of fast-growing fraud will be contained, APACS predicts.

Overall, online banking fraud losses reached over £21.3m during the six months to June, an incredible 185 percent increase when compared to numbers released last year. The increasing losses reverse a recent trend and are largely blamed on phishing and spyware scams.

Over 20,040 fraudulent phishing Web sites were established in the first six months of this year, an increase of more than 180 percent from the same 2007 period.

A small decrease in overall banking fraud stemming from lost or stolen cards was the one bright spot in APAC's otherwise dark numbers. Losses in this category slipped from £30.7m in 1Q 2007 to £27.3m in 1Q 2008, a dip of 11 percent. These numbers are the lowest in 10 years according to APACS, which attributes the drop to the introduction of Chip and PIN.

Sandra Quinn, director of communications at APACS, repeated the now familiar line that wider use of Chip and PIN outside of Britain would help to curtail plastic fraud.

Chip and PIN has also helped to combat fraud, with losses at U.K. retailers down by 35 per cent since 2005. (£73.2m during the period between January and June 2005, compared with £47.4m during between January and June 2008).

Quinn added "today, criminals continue to target those areas where we don't currently have the security benefits of chip and PIN, causing increases in fraud abroad and phone, Internet and mail order shopping fraud. Bank fraud abroad will be made more difficult for criminals to commit as more countries rollout chip and PIN."

To help manage Internet fraud, experts continue to urge shoppers to protect their computers with up-to-date anti-virus software.

They also recommend using only secure websites, and to register with MasterCard SecureCode and Verified by Visa when prompted, as these systems make credit cards more secure when shopping online.

"APACS is launching a new campaign at the end of October called "Be Card-Smart Online" which is aimed at providing further guidance and advice to help consumers stay safe online.

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Source: APACS.


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