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Now I'm not clairvoyant, but warning signs pointing to increased fraud losses were buried in last year's results, despite them being the lowest figures in the last five years: £341m. Specifically, there were two exceptions where plastic fraud increased (mail inception and lost and stolen).

This was a clear signal that the fraudsters were returning back to low-tech methods. Let's not beat up chip and pin here - it's had success. We too readily forget that had we not adopted it, extrapolated losses were expected to rise upwards of £840m. However, let me continue with the low-tech theme for now.

Counterfeit cheques also showed evidence of increased losses – again the jump from counterfeit cards and cash to cheque should not have been a surprise. Social engineering is a big menace and we should recognise the efforts of industry, trade bodies and government to educate the customer to be wise to the threats. Ignorance is a real problem and I think the case for contributory negligence against the customer continues to build.

One last thought. I'm just puzzled as to whether all banks are equally impacted or whether we have a few non-performers who might be distorting the statistics. That's something the trade bodies, regulators and shareholders probably need to contemplate. 

A valid and interesting viewpoint.  Perhaps we can carry this discussion on offline.  Please feel free to contact my office – happy to chat further.

Thanks. Putting out a statement that 41% of the fall is attributed to fraudsters impersonating customers is a little ambiguous and misleading from my perspective. Yes fraudsters can use genuine cardholder details to obtain goods or services (impersonation).  However, the reality is here we are measuring and talking about third party fraud - fraud not perpetrated by the cardholder. Yet CIFAS reports cite 18% increases in Account Takeover and 10% rises in Identity theft  - also third party fraud. The CIFAS measurements aren’t necessarily at the payment (Card) level – which is really the point that I was making in respect of comparing apples with apples in my initial blog.  

Finally, not sure I share your views on the first party issue. I think the industry takes the topic very seriously given that it is widely suspected that this type of fraud can also be a vehicle used to finance terrorist activities.   

2008 has witnessed some of the biggest insider fraud incidents affecting both consumers and the companies the data or goods are stolen from alike. According to a report released in June 2008 by BDO Stoy Hayward, fraud cost UK businesses more than £705m in the last six months, a 74 per cent increase over the same period last year. The biggest threat to business, however, came internally, with management fraud 46 per cent of the total. According to BDO Stoy Hayward, the problem of business fraud was certain to grow as senior executives at British businesses are becoming increasingly concerned about fraud risk as the credit crunch bites. As a result, we might see even more unscrupulous employees give into temptation in the near future, convinced they are incapable of being caught whether this is in an organisation or financial institution.

However, there are ways in which fraud can be combated. Financial institutions should consider monitoring employee activity more closely through Point of Compromise (PoC) detection. Even though, traditionally, PoC is the location at which the card skimming has taken place, the same techniques also allow banks to closely monitor employees accessing data and detect potentially suspicious behaviour. As a result, banks are in a position to generate an internal watch list to monitor customer transactions.

Given the current market environment and potential for reputational damage, fraud prevention needs to become a focus for any institution. Measures also need to be in place to prohibit temptation. Ultimately, employees should be monitored and placed under surveillance so that any bad apples are quickly identified.

As such, banks and organisations need to adopt a single view of all activity. This places financial institutions in a much stronger position to detect employee fraud. In an environment built on trust, a reputation for integrity is one of the most valuable assets an organisation or financial institution can possess.