The good news is that debit and credit card fraud fell by over 25% in 2009 to just over £440 million, down £170 million.

And this is the first decrease since 2006.

The figures come from The UK Cards Association, which represents UK credit card and debit card providers, and they also revealed that the skimming and cloning of cards also fell by a huge 50%. And cheque fraud took a similar dive downwards, dropping nearly 30% from just over £41 million to a touch under £30 million.

The bad news in an otherwise good result is that online banking losses, those committed online, rose by 14% to nearly £60 million.

Online fraud is growing because of people’s vulnerability at their end of the operation (personal computers are still prone to malware attacks), whereas the financial institutions themselves are far more difficult to penetrate due to their sophisticated system protections. Also, individuals are still prone phishing attacks and these tactics (bogus emails promising money, or spurious deals) are on the increase, up 16% to 51,000 recorded incidents.

Melanie Johnson, Chair of The UK Cards Association, said:
“The cards industry sees fighting fraud as a key part of keeping its customers’ interests centre-stage. We are committed to a wide range of measures to ensure customers feel confident, safe and secure when they use their credit and debit cards – whether in a shop, abroad, online, at a cash machine or anywhere else.

“And a fall in card fraud is good news for everyone – UK consumers, retailers and the industry. We recognise that cards will always be targeted by criminals, so we are determined not only to continue to prevent, detect and deter those who are behind this type of crime, but also to make sure that innocent victims don’t lose out.”

The Fraud Control Steering Group, which is the payment industry’s leading fraud prevention group, chipped in with its own comment. David Cooper, Chairman, said:
“Although online banking fraud losses have shown a year-on-year increase, card fraud remains a main focus of criminal activity. However, the industry remains committed to containing and reducing all areas of fraud. To this end, we will continue our partnership approach – working with law enforcement, retailers, consumers and the Home Office – to tackle fraud head-on.”

The levels of fraud are coming down for a number of reasons says The UK Cards Association, including such initiatives as chip and PIN; growth in the use of MasterCard’s SecureCode and Verified by Visa (adds an extra layer of security when online shopping); progress made by the Dedicated Cheque and Plastic Crime Unit (DCPCU), which is the industry-sponsored special police unit; and, the use of more sophisticated anti-fraud techniques by financial institutions and retailers alike.

And for those who were wondering how much such financial fraud accounts in the overall estimate of nefarious activities, then it’s a sobering thought that its only around 2%.

The aptly named National Fraud Authority recently announced that if you combined all the various fraud perpetrated in the UK in a year, it comes to a eye-watering £30 billion.

Guest Article by Neil Camp

Research from high-street bank Lloyds shows that people are becoming more worried about the dangers of identity theft and that the recession has made them feel worse.

The report revealed that 76% of adults are currently worried about identity theft and furthermore, that 39% feel more at risk now than they did six months ago, with the recession playing a major part.

Some 52% of those worried about ID theft believe that the recession has increased the risk, mainly because they argue that as unemployment increases, more people are driven towards criminal activity and ID theft.

And a considerable 57% of the people questioning think that social networking such as Facebook, have made it easier to steal personal details. In the same survey carried out 12 months ago, it was 47% who felt the same, so there has been a considerable rise in fear in the implications of being listed on popular social websites.

And although as many as 38% of Brits have experienced ID fraud (some 18% directly), of those asked, an incredible 57% admitted that they have not done enough to protect themselves and 25% don’t know much about it all anyway.

This is despite the fact that studies by the UK’s Fraud Prevention Service, CIFAS, shows that it takes an estimated 48 man hours to repair the damage resulting from fraud, with the cost to victims is frequently as high as £8,000. The CIFAS figures also show that ID fraud is on the increase, with a 15% rise over the year.

And like many other financial institutions, Lloyds TSB is trying to make its customers aware of the dangers.

Jatin Patel, spokesperson for Lloyds TSB, said:
“As technology improves, it gets easier and easier for criminals to steal our identities and during tough economic times the temptation becomes greater. Protecting ourselves by shredding documents and protecting passwords is a good start, but having someone else keep an eye on your ID offers extra peace of mind.”

By someone the spokesperson means Lloyds TSB and they have introduced what they call ID Aware, claiming that it allows customers to keep on top of their credit status and safeguard their identity, providing credit monitoring services and an early warning system to alert the customer to any activity involving their account, including someone trying to lighten it with suspicious cash withdrawals.

They don’t mention if there is a cost to such a service, but with talk of banks trying to make their customers more responsible for their actions when it comes to their financial affairs (i.e. the banks are going to stop stumping up for this kind of fraud shortly), then this might be a way for a customer to insulate themselves against the worse.

Guest Article by Neil Camp

According to Financial Fraud Action UK, the snappy title of the body known as the voice of the industry for financial fraud matters (previously known by a worse non-de-plume, APACS3), says its latest report paints a picture of first the good news, then the bad.

The findings, drawn up in conjunction with The UK Cards Association and the Cheque and Credit Clearing Company, show that card fraud losses are down 23% to £232.8m in first half of 2009 (compared with same period last year); there’s been a first ever fall in card-not-present fraud losses; and, cheque fraud losses down 26% to £15.6m.

The bad news comes in the online banking fraud losses which show a rise of 55% to £39m.

The actual fraud to turnover rate on debit and credit cards amounted to 0.1% in the first half of 2009, meaning that only around a tenth of a penny is lost to fraud in every £1 spent on cards.

Katy Worobec, Head of Fraud Control, said:
“These latest fraud figures are good news but we know there’s no room for complacency. Whilst industry online security initiatives such as Verified by Visa and MasterCard SecureCode may be making their presence felt, the fraudsters are never going to shut up shop and, of course, there are emerging areas such as online banking fraud which has risen again.

“Although it’s difficult to prove, we think that one of the reasons for this dip in card losses may simply be as a result of fraudsters realising that they can prosper more by targeting foreign-issued cards – particularly those without chip and PIN protection and which currently have stronger currencies than sterling. The fact that we’ve seen a 36% increase in the first half of this year in the amount of fraud being committed on foreign issued cards here in the UK adds some weight to this theory.”

Helping the successful trend was a special police unit sponsored by the banking industry to stamp out organised card and cheque fraud across the UK. Known by the initials DCPCU, the Dedicated Cheque and Plastic Crime Unit is believed to have helped save around £13 millions of fraud in just the first six months of the year. This is in addition to the £315 million in fraud savings to the industry as a result of the DCPCU’s work since its launch back in 2002.

Other factors of course have also played a part, not least Chip and PIN which say Financial Fraud Action UK has undoubtedly continued to make it more difficult for fraudsters to commit fraud on our cards in the UK. This has resulted in losses at UK retailers down by 26% from the same period last year. Mail non-receipt fraud fell by 33%, and lost and stolen card fraud is down by 6%, its lowest level since 1991 when the industry collation of fraud losses began. Furthermore, the banking industry is continuing to work closely with retailers to raise awareness of the ways in which retailers can protect their Chip and PIN terminals from criminals.

The growth in the use of MasterCard SecureCode and Verified by Visa (online payment systems that make cards more secure when shopping on the internet), by both online retailers and cardholders has helped cut losses from phone, internet and mail order shopping fraud. They have fallen for the first time ever and now stand at £134 million. Another reason for this drop has been the increasing use of sophisticated fraud screening detection tools by retailers and banks.

Fraud abroad has also dropped, mainly because financial institutions are now more aware of unusual spending habits, which means a transaction is refused before it potentially becomes a fraudulent act.

A decline in the use of the cheque was one main reason why such fraud losses during January to June 2009 decreased from £21.2 million to £15.6 million, a drop of 26%. The majority of fraudulent cheque payments get stopped when the cheque is paid, thanks also to the financial industry’s tighter controls.

In amongst the general back slapping there was a bit of bad news, with a 55% rise in online banking fraud losses which totalled £39.0 million during the six months to June 2009.

This increase is due to criminals employing more sophisticated methods to target online banking customers through malware attacks. These target not the financial institutions’ own systems (far more difficult to broach nowadays), but go for the weak part in the chain, the customer. And there has also been more than 26,000 phishing incidents (bogus emails seeking personal details for fraudulent use) during January to June 2009. This represents a 26 per cent increase on the amount seen in the same period last year.

The financial industry, say the Financial Fraud Action UK, continues to do its utmost to raise awareness about the importance of having up-to-date anti-virus and anti-spyware software. It is working with PCeU – the Metropolitan Police Service Police Central e-Crime Unit – which was established to co-ordinate the law enforcement approach to all types of e-crime. It also provides a national investigative capability for the most serious e-crime incidents.

Guest Article by Neil Camp

Starting today (12 October, 2009) is National Identity Fraud Prevention Week and the seven-day awareness period has kicked off with research revealing ‘shocking’ statistics for businesses and individuals.

The National Identity Fraud Prevention Week is an annual awareness drive and this year the emphasis is on warning Britain’s businesses of the risk identity fraud poses to them, their employees, their customers and their suppliers.

Research shows that one third of small and medium-sized businesses have been impacted by fraud. Furthermore, that British consumers are also experiencing a crisis in confidence, with only 3% feeling completely confident the organisations they deal with handle their personal data responsibly.

In response, the partners in the National Identity Fraud Prevention Week initiative have published a 28-page, free guide for businesses, including the launch of a dedicated online resource centre, outlining the risks and offering tips on how to keep corporate data safe, and advice on how to overcome a breach should one occur.

The main research findings reveal that only 64% of businesses have put in place a clear policy on how to handle documents with sensitive information. And nearly one-third (32%) of employees admit to always throwing sensitive documents directly into the bin. This is ironic, given that 64% of employees believe that documents discarded into bins are a bigger risk to customer details than computer systems, or document theft.

And generally, 71% of UK employees think their companies should do more to ensure confidential documents are handled in a responsible manner which does not open up people to fraud. The UK is not alone in this, with employees throughout Europe thinking the same (66% of Germans, 70% of Belgians, 61% of Dutch and 85% of the Irish).

Figures from the Government paint a pretty poor picture, with identity fraud costing the UK economy over £1.2 billion annually, sometimes with terrible consequences on those businesses which are effected.

But of course it’s not only businesses which are affected. Figures from UK’s Fraud Prevention Service, CIFAS, reveal that so far in 2009, some 60,000 UK residents have already fallen victim to ID fraud this year. And this represents a 36% increase over the same period last year.

Given this situation, it’s still hard to believe say the people behind National Identity Fraud Prevention Week, that 44% of Britons do not shred documents containing sensitive information before placing them in the bin. Furthermore, only 54% of them routinely check their financial statements, just 45% follow-up missing post and 69% report lost, or stolen documents.

Supporters of this year’s campaign are the Association of Chief Police Officers, Metropolitan Police, Fellowes, the National Fraud Authority, the Federation of Small Businesses, Equifax, CIFAS – The UK’s Fraud Prevention Service, Callcredit, Experian, the Home Office’s Identity and Passport Service, the British Chambers of Commerce, the British Retail Consortium and the Royal Mail.

Guest Article by Neil Camp

There’s no let-up to the ingenious ways cybercriminals think of parting innocent people from their money and a new twist has been spotted by ex-pats buying cars in France and Spain.

The theory behind this scam is straightforward. The UK is blessed with a second car market that has lots of vehicles washing about. In France and Spain there is a slower turn-over of cars, so the purchase of a second hand car in these two countries can be an expensive business. So, some ex-pats who live on mainland Europe, but fancy getting themselves a left hand drive bargain, look back to the UK for good examples at more competitive prices.

The trouble is that unscrupulous individuals, some car dealers who are trying to cope with the credit crunch in the UK, egged by those scammers who think emails are a modern day Dick Turpin, have spotted an opening.

And it works like this. A buyer looking for a good left hand drive car deal in France, scans the main second hand car websites in the UK. They spot what looks like a good example – right sort of mileage, really good price and a fine example of the type – and tries to telephone the seller. The mobile number – it’s usually always a mobile – goes straight to answer machine so the prospective buyer, keen to hammer down a deal on the car, sends an email instead.

Okay so far? Right, back comes an email reply with a simple message that says very sorry, the car happens to be kept in London (plausible) and the seller, who says he’s currently say in Portugal (again very plausible), will gladly come back and show the prospective buyer the car, but he’s been stood up so many other times by buyers not bothering to show, that he’s reluctant to do it again (what’s more plausible than that).

So that’s the scene set and the hook baited. Now is the clever bit. The seller says he would come back, if the prospective buyer gave a sign of his intentions. And, suggests the accommodating seller, why doesn’t the buyer deposit a sum of money in his name (the buyer’s name), say by MoneyGram, and then send the seller a copy of the MoneyGram receipt by email, to show the seller he is serious. And, says the seller, there’s no risk because the money is in the buyer’s name. What could be more innocent?

The sum might be a token amount, a percentage of the car price, or even, if the seller was audacious, the price of the car. And many buyers have gladly done this, thinking there can’t be a con here, because as the seller points out, the money remains in the buyers name.

Not so of course. For those that use and understand such systems as MoneyGram, and Western Union, these are money transfer services. You send them your money and they in return provide you with a receipt with a reference number. And there’s the crux of the scam. Anyone with the reference can ask for the money – that’s how the system works.

And that’s why the bogus seller is asking for the buyer to send the number. Buyer thinks its just a matter of good faith, whereas seller thinks it’s payday. With the number, he withdraws the funds and of course the car, supposedly for sale, never existed in the first place.

As always, simple and clever. The key rule is of course, don’t ever get into a convoluted arrangement over buying something. If, as in this case the guy doesn’t want to go back to the UK to sell his car, then tough.

Remember, if it sounds a bit odd, then it most probably is.

Guest Article by Neil Camp