Global card fraud on the rise...but is it taken seriously?

According to Finextra, a survey carried out by Research Now for ACI Worldwide shows that nearly a third (29%) of the 4,200 people surveyed across 14 countries have been victims of card fraud in the last 5 years.  When comparing data with that from the 8 countries surveyed in 2009, this is a 60% increase. In the UK the numbers are even higher (33%) as I mentioned in a post last month ("One third of UK adults are victims of card fraud").

What is of interest to me is that according to the survey, 81% of the respondents have confidence in the ability of their bank of financial institution to protect them - despite the prevalence of card fraud.  That is a great statistic and reflects the time, energy, commitment, and funding put into battling such fraud by the private sector - as well as the focus and dedication of law enforcement agencies.  There is no argument that from this perspective it is taken seriously.

Yet it would be great if governments would play their part too, by better understanding that Financial Crime (and Payment Card Fraud in particular) is something that is of great concern to the vast majority of their people, and not just a problem for the industry.  In many countries the penalties for convictions for financial crime are weak, and therefore not a real deterrent to the criminals (often organised criminal gangs) that commit such offences.

If the pundits are right, and cash is (increasingly) no longer king, it's replacement is electronic payments, which means increased usage of payment cards.  That means that payment card fraud will continue to increase as a problem for both the industry and society - to counter this, perhaps punishments for convicted criminals should now be reviewed ........and where possible increased to levels commensurate with the seriousness of such crimes. 

As well as being distressing and inconvenient for cardholders and society, and expensive and time consuming for the industry and law enforcement, such crime also generates proceeds that can be used for the finance of global terrorism, and other sinister agendas.  Now is the time for governments to recognise this and for a tougher stand to be taken by legislators and the judiciary.

UK Public sector loses £21 billion in fraud, 55% of the overall annual total..

According to the Annual Fraud Indicator just published by the UK National Fraud Authority (NFA) it seems that £38.4 billion was lost to fraud in the UK last year and of this a staggering £21 billion (55%) is due to losses in the public sector.  By comparison £12 billion (32%) was lost by the private sector, £4 billion (10%) by individuals and £1.3 billion (3%) by charities.

I am not at all surprised by the way that the NFA has presented these figures, a public sector organisation it seems to be trying to downplay the significance of the public sector fraud losses by saying that 'in part it is due to more diligent reporting by the the public sector'.   I'm still spinning from that one (excuse the pun!). 

The published UK budget deficit (ONS) for December 2010 is £16.8 billion, with total net debt of £2322.7 billion.  In this age of austerity, significantly reducing public sector fraud losses would make a huge impact on the budget deficit, thereby reducing the needs for cuts elsewhere.

The financial services industry is possibly the most diligent in trying to drive down fraud losses by investing in fraud prevention measures, and has seen some great success, partly due to the roll out of 'Chip and PIN' or EMV cards and terminals.  The industry lost £3.6 billion (included in the private sector loss figure).  The good news is that this figure was down slightly on the previous year's figure of £3.8 billion, thanks to improved fraud prevention methods involving plastic cards - resulting in a cut of £440 million - and cheque fraud - £30 million.  In contrast, online banking saw an increase of 14%, to £60 million. The NFA attributes this to criminals using more sophisticated methods to target customers through malware and a spike in phishing incidents.

It would be nice if the UK public sector would take the lead from the financial services industry and become more diligent in tackling fraud, by investing more effort and money, to seriously tackle its massive annual fraud loss figure........thereby (hopefully) reducing the austerity squeeze on the long suffering tax payer.  You can download the NFA Annual Fraud Indicator here

One third of UK adults are victims of card fraud..........

According to the annual Card Fraud Index released yesterday by life assistance company CPP, Card fraud has now affected a total of 13 million people in the UK during their lifetimes.

But there is some good news.  2010 saw a three per cent reduction in the number of card fraud incidences with seven per cent of people saying they had suffered from card fraud in the last 12 months compared to 10 per cent in 2009.  However, card fraud is still a problem and people need to remain vigilant and take responsibility when using their cards.

The Card Fraud Index also reveals the methods criminals are using, with most victims (20%) having the magnetic stripe on their card cloned at an ATM or via a payment terminal.  This is a three per cent increase on 2009. One in five victims have been defrauded online with criminals using the internet to obtain card details.

Alarmingly a third of card fraud victims (33 per cent) don't even know how they became a financial victim, with a third hearing directly from their bank (34 per cent) and six per cent being refused money at an ATM. A further six per cent found out when their card was refused at point of sale.  Victims of card fraud reported the average amount stolen was £417 with one in 20 (four per cent) reporting losses of more than £2,000.

According to Nick Jones at the CPP blog it seems that younger people are most at risk.  Card cloning or counterfeit fraud is the most dominant type of fraud.  The research shows that:

•    18-24 year olds tend to be the least security conscious overall only 37% checking their bank statements on a regular basis, verses 67% of people aged 65+,

•    This younger demographic are also more likely to not shield their PIN number at an ATM and check an ATM for tampering, but let others shop online with their cards and share their PIN details with other people.

Don't be a victim of card fraud!  Below are some card fraud prevention tips from CPP, and for more information on the above see http://www.cpp.co.uk/ or http://blog.cpp.co.uk/

Top tips from CPP to help avoid being a victim of card fraud

1) Don't carry multiple debit/credit cards in a wallet – only carry the essential cards you need
2) Don't leave belongings unattended while shopping
3) Don't carry debit/credit cards loose in a bag or pocket
4) If your cards are registered with a Card Protection company make sure you have their emergency loss reporting number
5) Don't ever write down your PIN number
6) Don't let a shop assistant take your debit/credit card out of sight – they could be copied or cloned
7) Don't let someone else take money out on your behalf
8) Check your receipts against your statements when you get home
9) If you are concerned your cards may have been lost or stolen, contact your bank immediately to get the card cancelled
10) Make sure your bank has up-to-date contact details for you, including your mobile phone number in case they need to check if transactions are genuine.

Do you protect your PIN at an ATM?

Watch the video below to see why you should.  The seized criminal video footage shows you what they see.............