New figures released on UK fraud by Financial Fraud Action UK (FFA UK) show that levels of card and online banking fraud rose during 2013.
Improved fraud detection and prevention systems used by banks and established internet retailers continue to have a positive impact, but intelligence suggests that criminals are now targeting individual consumers and small businesses – driving the recent reported losses. While consumers are warned to be vigilant, they continue to enjoy strong legal protections against bearing any personal losses – meaning online shopping remains safe and secure.
Fraud losses on UK cards totalled £450.4 million in 2013, a 16% rise on the total in 2012 of £388.3 million. This figure is still down 26% since fraud was at its peak in 2008. At the same time, total spending on all debit and credit cards reached £532 billion in 2013, a rise of 6.1% on 2012, with 10.9 billion transactions made in the year1.
Overall, card fraud losses as a proportion of the value of purchases on our cards has increased only slightly – from 7.1p for every £100 spent in 2012 to 7.4p in 2013 (in 2008 it was 12.4p for every £100). The total number of all transactions rose by over half a billion between 2012 and 2013.
Losses on remote card purchases (those made online, over the telephone or by mail order) increased by 22% to £301.1 million in 2013, from £246.0 million in 2012.
The UK is Europe’s leading online shopping economy with spending by British consumers online growing by 16% in 2013 to reach £91 billion2. Card payments are the main driver of this growth as they provide the most effective way to pay online. Debit and credit cards also offer consumers protection against fraud.
Online fraud against UK retailers totalled an estimated £105.5 million in 2013, a rise of 4% on the previous year. However, there has been a substantial increase in fraud against online retailers based overseas, rising 48% to an estimated £57.8 million.
Enhanced card security features, such as Chip & PIN, as well as advanced real-time fraud screening techniques employed by banks and established internet retailers, have forced criminals to change tactics. As well as tricking customers into handing over personal and financial details (including cards and PINs), for example over the telephone while posing as officers from the bank or the police, fraudsters are also increasingly using digital attacks, such as malware and data hacks, to compromise card details.
Malware is malicious software which is unknowingly downloaded onto a computer and which then enables fraudsters to steal personal or financial information or perform unauthorised actions on the device. It is believed criminals are using these stolen details to commit fraud by targeting those online retailers which have not yet adopted security measures put in place by more established firms.
In order to help tackle this trend, experts and the police are urging consumers and online businesses to install security software, often freely available from a customer’s own bank. To prevent stolen card details being used to make purchases online, retailers are being advised to take steps to improve their security, including use of the online protection (including American Express’ ‘Safe Key’, ‘Verified by Visa’ and MasterCard’s ‘SecureCode’) and by following the prevention tips listed below.
Meanwhile, a major national campaign ‘Be Cyber Streetwise’ has been launched by the Government, supported by FFA UK and offers further advice that consumers and small businesses can adopt to protect themselves while shopping or banking online.3
The card fraud figures are also a reminder to consumers to be vigilant against scams. Losses due to fraud on lost or stolen cards increased by 7% to £58.9 million from £55.2 million in 2012, with distraction thefts in shops and bars and shoulder surfing at ATMs highlighted.
Meanwhile, ‘vishing’ over the telephone, with fraudsters tricking consumers into parting with personal or financial information, has been identified as a driver for the 14% rise in card ID theft to £36.7m from £32.2m. In response, the industry is highlighting to consumers the ‘golden rule’ that the bank and the police will NEVER phone or email customers asking for their PIN or full online banking codes, or visit their home to collect a bank card.
Online banking fraud has increased by 3% to £40.9 million from £39.6 million in 2012. Intelligence shows this increase has also been driven by the rise in ‘vishing’ and malware. Fraudsters are increasingly targeting business customers rather than personal accounts due to the prospect of a potentially higher return.
Telephone banking fraud has fallen 8% to £11.6 million from £12.6 million in 2012. This fall has been as a result of tighter processes by banks which are designed to confirm customers’ identity.
Cheque fraud losses fell 22% to £27.5 million from £35.1 million in 2012. Improved fraud detection methods used across the industry, including the digital analysis of cheques, has led to the considerable decrease.
“Whether in the real world or online, these latest fraud figures show just how important it is for consumers and businesses to know how to protect themselves against fraud. Always make sure you have the latest security software installed on your computer, so you can safely shop and bank online,” comments Detective Chief Inspector Perry Stokes, Head of the Dedicated Cheque and Plastic Crime Unit.
“Fraudsters can be extremely persuasive – do not be fooled. Your bank or the police will never call, visit or email you to request your PIN, collect your bank card, or ask you to transfer money to another account. Anyone attempting to do so is a fraudster.”
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