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Brian Pennington

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UK Card Association

UK Card Fraud losses fall because of technology and risk awareness

The UK Card Association along with the Cheque & Credit Clearing Company, Financial Fraud Action UK and other industry groups has produced their report on UK fraud activities during 2011.

The results released in March 2012 show, Fraud losses on UK cards fell 7% from £365.4m in 2010 to £341.0m in 2011, a ten year low.

The reductions have been attributed to the efforts of the industry to “deter, detect and prosecute fraudsters”.

Card Scheme initiatives have been noted as working, for example:

  • MasterCard SecureCode
  • Verified by Visa
  • American Express SafeKey

Awareness and technology have combined to improve fraud protection by:

  • Offering advice to retailers and consumers
  • Improved the sharing of fraud data and intelligence within the industry
  • Sharing fraud data with law enforcement
  • Chip and PIN equipment
  • Fraud detection tools

Payment Card Industry Compliance was not mentioned in the release but from experience the majority of awareness campaigns, training and policies implementations by Merchants have resulted from the mandates of PCI DSS.

Of interest is the switch in direction by the fraudsters to older fraudulent methods e.g. telephone and cheques, see the exact numbers at the end of the post.

Melanie Johnson, Chair of The UK Cards Association comments:

Driving down fraud and keeping cards safe continues to be a priority for the industry. This is the third year card fraud losses have fallen – clear proof that our endeavours to fight fraud are packing a punch. Customers have also played their part in driving down losses by taking heed of advice about looking after their personal and financial details. Fortunately, they can always be confident that if they are the innocent victim of fraud, they have excellent fraud protection that they don’t get if they use cash.”

DCI Paul Barnard who heads up the industry-sponsored police squad, the Dedicated Cheque and Plastic Crime Unit says:

As technological advances have made our payments more secure, we’ve seen a spike in more simplistic crimes. Many scams involve customers being conned into handing over their cards and PINs, or their telephone banking security details by someone calling, pretending to be their bank or police. Our appeal to the public is to be wary of any unsolicited phone calls or emails. Never hand over your card and PIN or bank security details in full as neither your bank or the police will ever ask you for these.”

UK Fraud broken down by type over the past 5 years is shown below:

Card Fraud Type on UK-issued credit & debit cards 2007 2008 2009 2010 2011 % +/- 10/11
Telephone,   internet and mail order fraud (card-not-present fraud) £290.5m £328.4m £266.4M £226.9m £220.9m -3%
Counterfeit   (skimmed/cloned) fraud £144.30 £169.8m £80.9m £47.6m £36.1m -24%
Fraud on lost or stolen cards £56.2m £54.1m £47.7m £44.4m £50.1m 13%
Card ID theft £34.1m £47.4m £38.2m £38.1m £22.5m -41%
Mail non-receipt £10.2m £10.2m £6.9m £8.4m £11.3m 34%
TOTAL £535.2m £609.9m £440.0m £365.4m £341.0m -7%

See a summary of the 2010 figures here.

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UK Cards Association warns of growing Credit Card fraud phone scam targeting the over-60s

Basic creditcard / debitcard / smartcard graph...

The UK Cards Association has warned about an old-style phone scam that is increasingly being used by fraudsters across the UK.

The scam involves unsuspecting cardholders being called and duped into handing over their debit or credit card, and revealing their PIN, by a fraudster pretending to be from their bank, card company or the police. Just this year more than £750,000 has been lost to this type of fraud, with the criminals responsible stealing an average of £10,000 per incident.

The scam begins with the fraudster phoning up, typically claiming to be from the prospective victim’s bank, and saying either that their systems have flagged up a fraudulent transaction on their card or that their card is due to expire and needs replacing. By seeming to offer assistance, the fraudster tries to gain the victim’s trust. In most cases the victim is then asked to ‘activate’ or ‘authorise’ the replacement card in advance by keying their PIN into their phone’s handset.

The fraudster or an accomplice then poses as a bank representative or a courier to pick up the customer’s card from them at their home, sometimes also giving the victim a replacement card (which is a fake). In some cases a genuine courier company is hired to pick up the card, which the victim has been asked to place in an envelope. Once they have the victim’s card and the PIN the fraudster uses them to withdraw cash and go on a spending spree.

Top tips to avoid this scam:

  • Your bank will never ring you and tell you that they are coming around to pick up your card, so never hand it over to anyone who comes to ‘collect it’.
  • Your bank will never ask you to ‘authorise’ anything by entering your PIN into the telephone.
  • Never share your PIN with anyone – the only times you should use your PIN is at a cash machine or when you use a shop’s chip and PIN machine.

If you think you may have been the victim of a fraud or a scam of this nature you should call your bank or card company immediately.
DCI Paul Barnard, Head of the Dedicated Cheque and Plastic Crime Unit (DCPCU), the special police unit established by the banking industry to fight fraud, said:

“You should never hand over your bank card to someone who turns up on your doorstep, however convinced you are that they are genuine. Likewise, you should never give anyone your PIN or punch the number into your phone as a result of someone contacting you out-of-the-blue – wherever they claim to be from. If you have any doubts when approached in this way you should hang up the phone and call the organisation back on a number that you know is correct. If you think you have already been a victim of this scam, contact your bank or card company immediately. If you are the innocent victim of card fraud you will not suffer any financial loss.”

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Card fraud and online banking fraud down, but cheque and phone banking fraud up

New figures released on the 5th October 2011 show that fraud losses on UK cards decreased in the first half of 2011 compared with the same time last year, as did fraud on online bank accounts. However, cheque fraud and fraud on phone banking accounts increased over the same period.

Total fraud losses on UK cards fell to £169.8 million

Between January and June 2011 a 9 per cent reduction compared with losses in the first half of 2010. This half-year total is the lowest for eleven years and also the third consecutive decrease. The sustained fall is due to the success of a number of industry initiatives such as the increasing use of fraud detection software, the roll-out of updated chip cards and the increasing roll-out of chip and PIN technology abroad. Lost and stolen card fraud losses rose slightly, increasing by £4.4 million. Initiatives such as chip and PIN have made it harder to commit ‘high-tech’ frauds, and criminals are instead reverting to more basic frauds centred around stealing people’s cards and PINs. These scams range from distracting people in shops or at cash machines and then stealing their cards without them noticing, to simply tricking them into handing over their cards and PINs on their own doorstep.

Online banking fraud losses totalled £16.9 million

During January to June 2011 a 32 per cent fall on the 2010 half-year figure. A variety of factors have contributed to the decrease in online banking fraud, including increased customer awareness of computer security combined with banks’ use of fraud detection software.

Phone banking fraud losses rose to £8.6 million

A 48 per cent increase during January to June 2011. As with card fraud, criminals are focusing on the straightforward crime of duping a customer into believing they are dealing with a bank or police representative and getting them to disclose their financial security details, such as PINs, passwords and login details, which the criminal then uses to access the customer’s bank account over the phone.

Cheque fraud losses increased

Cheque fraud losses increased from £14.0 million in the first half of 2010 to £16.4 million during the same period in 2011. Although this is a 17 per cent increase, the overwhelming majority of this type of fraud is stopped before the cheque is paid. In fact, more than £254 million of attempted cheque fraud was spotted and stopped during the clearing process in the first half of this year.

DCI Paul Barnard, Head of the Dedicated Cheque and Plastic Crime Unit (DCPCU), the special police squad which is sponsored by the banking industry and has an ongoing brief to help stamp out organised payment fraud across the UK, said:

Losses are appreciably lower than they were a few years ago and everyone involved in tackling fraud has reason to be encouraged by this and that includes bank customers who, as their own front-line of defence, have certainly played their part too.

“However, there has been an increase in old fashioned scams criminals using distraction techniques and social engineering methods to get hold of people’s cards or phone banking details. We are urging everyone to be on their guard. Your bank or the police will never cold call you or email you and ask you for your login details, cards or PINs. If anyone does, they are probably  a criminal, so hang up the phone or delete the email.”

Card Fraud Type – on UK issued credit and debit cards Jan-June 2007 Jan-June 2008 Jan-June 2009 Jan-June 2010 Jan-June 2011 +/- 10/11
Phone, internet and mail order fraud (Card-not-present fraud) £137.0m £163.9m £134.0m £118.2m £109.2m -8%
Counterfeit (skimmed/cloned) fraud £72.3m £88.8m £46.3m £28.2m £18.0m -36%
Fraud on lost or stolen cards £30.7m £26.8m £25.1m £21.3m £25.7m 20%
Card ID theft £18.7m £19.5m £23.9m £15.0m £11.5m -23%
Mail non-receipt £4.9m £5.3m £3.5m £3.8m £5.4m 42%
TOTAL £263.6m £304.2m £232.8m £186.8m £169.8m -9%

The release places some of the success on fraud detection solutions and Chip and Pin but lets not underestimate the impact of the improved focus on IT Security which is being enforced by compliance and regulatory requirements like PCI DSS and the Data Protection Act.

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Phishing – the UK banking losses

Malware logo Crystal 128.
Image via Wikipedia

In March 2011 the UK Card Association reported that Online banking fraud losses totalled £46.7 million in 2010. This represented a 22 per cent fall on the 2009 figure. 

The factors contributing to this fall include

  • Customers better protecting their own computers with up-to-date anti-virus software
  • Banks’ use of sophisticated fraud detection software.

This decrease has occurred despite a continuing rise in phishing attacks, up 21% from 2009.

UK annual reported banking losses 2006 to 2010 due to Phishing

  2006 2007 2008 2009 2010 % +/-09/10
No of phishing attacks  14,156 25,797 43,991 51,161 61,873 +21%

The link to the UK Card Association Press Release is here

In my last blog post Fraud Intelligence Report – First Quarter 2011 there were some other interesting Phishing statistics:

  • Phish attack volume increased 17% from the previous quarter to 99,800 attacks
  • The number of targeted organizations increased 11% from the fourth quarter of 2010, to 511
  • Attacks per organization increased 6% from Q4 2010 to 195
  • Financial sector accounted for 47% of phish attacks in the first quarter of 2011
  • Payment Services sector accounted for 27%
  • Auction sector phish increased 47% quarter-over-quarter to 5,414 attacks
  • Gaming sector phish increased 60% from the previous quarter to 6,834 attacks
  • Social Networking sector phish increased 40% from the previous quarter to 4,768 attacks

Source of Phishing in quarter one 2011

  • UK grew by 63%
  • Russian-hosted phish grew 93%
  • North America hosted the majority of phishing attacks, with 61% of total attacks in the first quarter
  • Western Europe followed, hosting 19% of phishing attacks in the same period

Read the blog – Fraud Intelligence Report Q1 2011 here

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Fraud losses drop on UK cards, cheques and online banking

The UK Card Association reports that fraud losses over 2010 in the UK on cards, cheques and online backing has dropped against 2009 figures.

Total fraud losses on UK cards fell to £365.4 million in 2010 – a 17 per cent reduction compared with losses in 2009. This is the lowest annual total since 2000 and follows on from a fall of 28 per cent in 2009. This current downward trend is due to the banking industry’s ongoing investment to deter, detect and prosecute fraudsters.  Initiatives include: better awareness amongst retailers about how to protect their chip and PIN equipment from criminal attack; greater sign-up to online fraud prevention initiatives such as MasterCard SecureCode and Verified by Visa by cardholders and retailers; improved industry sharing of fraud data and intelligence; increasing use of fraud detection tools by banks and retailers; the increasing roll-out of chip and PIN abroad and the upgrade of chips on UK cards.

Online banking fraud losses totalled £46.7 million in 2010a 22 per cent fall on the 2009 figure. Factors contributing to this fall include customers better protecting their own computers with up-to-date anti-virus software combined with banks’ use of sophisticated fraud detection software. This decrease has occurred despite a continuing rise in phishing attacks, up 21% from 2009.

Phone banking fraud losses totalled £12.7 million during 2010, an increase of five per cent from 2009. Most losses involve customers simply being tricked into disclosing their personal security details – through cold calling or fake emails – which the criminal then uses to commit fraud. This suggests that some customers are still not aware that their bank will never cold call or email them to ask for login details and passwords.

Cheque fraud losses decreased from £29.8 million in 2009 to £28.9 million during 2010. The vast majority of attempted fraud gets stopped before the cheque is paid. The industry’s ongoing work to prevent cheque fraud has helped drive these losses down. The continuing drop in cheque usage has also contributed to the three per cent fall in overall cheque fraud losses.

Detective Chief Inspector Paul Barnard, Head of the Dedicated Cheque and Plastic Crime Unit (DCPCU) – the industry-sponsored specialist police unit that tackles the organised criminal gangs behind fraud – comments: 

“Whilst another drop in fraud is good news, the fraudsters haven’t shut up shop which is why there can be no room for complacency on the part of the banking industry, retailers, law enforcement or indeed customers themselves.  By taking simple steps, such as:  shielding our PIN with our free hand whenever we enter it, particularly at cash machines; being wary of unsolicited emails or calls; and making sure that our computers have regularly updated anti-virus software in place, we can make life harder for the criminals.

“Fortunately in the UK – unlike some other countries – innocent victims of any type of payment fraud on their debit or credit card or account are protected and should not suffer any financial loss.”

Melanie Johnson, Chair of The UK Cards Association, which represents UK credit and debit card providers said:

“The cards industry is greatly encouraged by the major decrease in card fraud losses for a second successive year, but we will not be easing off our efforts as a result. It is essential to us that customers feel safe and secure when they use their cards and we will continue to invest in a wide range of fraud prevention initiatives to keep it this way.”

Fraud figures released by the National Fraud Authority (NFA) earlier in the year also serve to put these banking fraud losses into perspective. The NFA estimated that fraud in all its guises costs the UK more than £38 billion a year – card and banking fraud accounts for just over one per cent of this figure.

Details of the figures from 2007, 2008, 2009 and 2010 compare can be found here http://www.theukcardsassociation.org.uk/media_centre/press_releases_new/-/page/1323/

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