A massive rise in fraud committed on UK cards abroad pushed up industry losses in the first half of the year, even though domestic card fraud levels fell during the period, according to industry figures released by payment association Apacs.
Total credit card fraud losses increased by 26% to £263.6 million in the six months to June 2007, compared with £209 million in the first half of 2006.
The rise was mainly driven by the rise in fraud committed on UK-issued cards abroad, which jumped 126% to £108.8 million in H1, from £48.1 million a year earlier.
By contrast UK card fraud losses fell four per cent during the period from £160.8 million to £154.8 million. Losses at UK retailers fell 11% to £37.5 million, while cash machine fraud was down 57% to £17.1 million.
Apacs says chip and PIN has contributed to the drop in domestic fraud, but fraudsters have switched to using cloned cards abroad in places where chip and PIN hasn't yet been implemented.
"These figures show how the fraudsters have changed tack," says Sandra Quinn, director of communications, Apacs. "A couple of years ago they were mainly stealing cards and card details for use in UK shops and cash machines, but today, because of chip and PIN, they have been driven overseas - using fake magnetic stripe cards specifically in countries which have yet to upgrade to chip and PIN."
Meanwhile the 157% rise in Internet shopping contributed to a 44% jump in card not present (CNP) fraud, which rose from £95.3 million to £137 million.
However, on a more positive note, the first half saw a steep drop in Internet banking losses, which fell 67% from £22.4 million to £7.5 million, even though phishing incidents rose by 42%.
Apacs says the decrease occurred because online banks have successfully implemented a range of measures to detect and prevent fraud, coupled with the fact that there was an unusually high level of online banking fraud in the first few months of 2006.