Card and online banking fraud losses on the rise in UK

Losses from UK card and online banking fraud both increased during the first half of the year as phishing attacks spiked and the criminal fraternity turned to old-school deception cons to trick people into handing over their cards and PINs.

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Card and online banking fraud losses on the rise in UK

Editorial

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According to The UK Cards Association, total fraud losses on UK cards reached £185.0 million between January and June 2012, a nine per cent increase over the same period last year.

With technology such as chip and PIN helping to keep fraud levels well below the peak of £304.2 million seen in H1 2008, criminals have turned their attention to more straightforward ways of getting hold of people's cards and PINs. This includes distracting people in shops or at cash machines and then stealing their cards without them noticing, as well as simply tricking them into handing over their cards and PINs on their own doorstep.

Similar trends can be seen on the Web, where online banking fraud losses totalled £21.6 million during January to June 2012 - a 28% increase on the 2011 half-year figure. This has been driven by a huge increase in the number of phishing Websites, says the UK Cards Association, as well as an uptick in deception scams. In the latter instance, online banking customers are being tricked into divulging their login details and passwords over the phone to someone they believe is from their bank but is actually a fraudster.

Cheque fraud losses are also on the rise, up nine per cent to £17.9 million in the first half, with the only bright spot coming from a 21% decrease in phone banking fraud to £6.7 million.

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Comments: (2)

Brett King

Brett King CEO & Founder at Moven

We're seeing a significant increase in social engineering and malware. There's not much banks can do to stop their customers being stupid and giving away their PIN or password, but multi-factor along with good analytics should prevent out-of-band attempts in most cases.

We need to step-up our capabilities on understanding customer behavior in respect to technology use, so we can predict when our customers' accounts are being compromised by fraudulent activity.

Andy Morris

Andy Morris Risk Business Solutions Consultant at ACI Worldwide

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. 

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