UK card fraud falls again, but is it still a problem?

There was some good news this week with The UK Cards Association reporting fraud on UK credit and debit cards in 2010 was at its lowest level since 2000 – a 17% reduction on 2009 figures to £365.4 million.

Two questions come to mind, what’s behind the reduction and should we let our guard down when it comes to protecting our credit and debit card details?

To answer the former, there has been a 15% reduction on card-not-present (CNP) fraud which is essentially criminals using stolen card details fraudulently over the internet, phone or mail order. Although we have seen a significant year-on-year reduction, CNP losses still totalled £226.9 million in 2010.

Elsewhere, losses attributed to counterfeit fraud – where a person’s card is cloned or skimmed to make a fake card that is often used abroad where Chip and PIN isn't used, dropped 41% to £47.6 million; a significant reduction on the £169.8 million lost to this type of fraud in 2008.

On a very positive note, online banking fraud losses were down to £46.7 million, which is especially encouraging as more and more people are using their bank’s online banking facilities to manage their day-to-day banking.

So what specially is causing the decline in card fraud? Well it’s due to a combination of factors. The banks have put a lot of hard work into developing sophisticated fraud screening tools which is helping to identify and stop CNP fraud, and consumers are also increasing using MasterCard SecureCode and Verified by Visa to authorise online transactions.

A special police unit called the Dedicated Cheque and plastic Crime Unit (DCPCU) set up in 2002 has also made big inroads into reducing card fraud losses by targeting organised fraud gangs operating both in the UK and abroad.

Another factor is the use of more secure Chip and PIN cards that the banks and credit card companies have been sending out since 2008. These more secure cards with updated integrated circuit card verification (iCVV) make it more difficult for fraudsters to tamper with Chip and PIN terminals to harvest card details.

So should we take it for granted that the battle against fraud is won? To do so would be a mistake. The banking industry needs to continue to develop counter-fraud initiatives, and consumers need to maintain a proactive and diligent approach to safeguarding their payment card details.

Install up-to-date anti-virus software, ignore phishing e-mails and unsolicited phone calls, be vigilant at ATMs, and regularly monitor your bank statements and credit reports.