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APACS Reports Card Fraud Statistics for 2007

In the UK, APACS has reported 2007 statistics for both card fraud losses and online banking fraud losses. Card fraud losses were up by 25% with the increase being driven by a £90.5 million increased in fraud abroad as more UK card details were stolen for use in countries yet to upgrade to chip and PIN. Online banking fraud losses went down 33% to £22.6 million.

2007 card fraud figures released today (12 March 2008) by APACS, the UK payments association, show that total card fraud losses rose by 25 per cent in the past year to £535.2m. A key driver behind this is the 77 per cent increase (up £90.5m) in fraud committed overseas by criminals using stolen UK card details – which typically occurs in those countries yet to upgrade to chip and PIN. Fraud abroad now accounts for over one third (39 per cent) of total card fraud losses.

Chip and PIN continues to have a hugely positive effect on card fraud committed in the UK. Over the past three years losses on face-to-face transactions on the UK high street have fallen by two-thirds from £218.8m in 2004, to £73.0m last year. Thanks to chip and PIN the 2007 figures also show that fraud on lost and stolen cards (£56.2m), and mail non-receipt fraud (£10.2m), are at their lowest levels for 10 years.

Counterfeit fraud losses have increased by 46 per cent but the vast majority of this fraud is due to criminals stealing card details in the UK to make counterfeit magnetic stripe cards for use in countries yet to upgrade to chip and PIN. The UK banking industry continues to encourage other countries around the world to upgrade to chip and PIN. This type of fraud will also become more difficult when the European banking industry meets its target to complete its chip card rollout by 2010.

Sandra Quinn, director of communications at APACS, says: “Although card fraud levels have now begun to go up again due to fraud abroad and card-not-present fraud losses, chip and PIN has proven to be an undoubted success in reducing card fraud on the UK high street. And, as more countries follow our lead and upgrade to chip and PIN, the opportunities for criminals to use our stolen magnetic stripe details overseas will decrease.

“The banking industry continues to work with law enforcement, the retail sector, the Home Office and organisations such as the charity Crimestoppers to identify ways of actively protecting against all types of banking fraud. This reflects the multi-layered approach needed – an approach that has recently seen the creation of the Payments Industry and Police Joint Intelligence Unit – a vital addition to the UK’s fraud-fighting arsenal.”

The launch of the new Payments Industry and Police Joint Intelligence Unit (PIPJIU), announced on Monday 10 March, will enhance the work of the Dedicated Cheque and Plastic Crime Unit (DCPCU) – the specialist police unit fully sponsored by the banking industry. The PIPJIU will improve the quality and scope of industry intelligence the DCPCU can access, increasing the operational effectiveness of the Unit.

Card-not-present fraud losses have increased by 37 per cent and account for more than half of all card fraud losses. However, these losses have to be seen in the context of huge increases in the amount of people shopping online and over the phone, and the numbers of shops offering telephone or online shopping - from 2001 to 2006 card-not-present fraud losses rose by 122 per cent; over the same time period, the total value of online shopping transactions alone increased by 358 per cent (up from £6.6 billion in 2001 to £30.2 billion in 2006).

Tackling card-not-present fraud is a priority and the industry continues to encourage cardholder and retailer take-up of MasterCard SecureCode and Verified by Visa - secure online payment systems that help prevent online shopping fraud: www.shopsafeonline.org.uk details information about these systems.

Online banking fraud losses totalled £22.6m in 2007 – a 33 per cent decrease from 2006 losses. This year-on-year decrease is all the more impressive given that phishing incidents almost doubled from 14,156 in 2006 to 25,796 last year. Help and advice about preventing all types of online banking fraud is available at www.banksafeonline.org.uk.

Following significant year-on-year reductions in 2005 and 2006, cheque fraud losses in 2007 rose 10 per cent to £33.5m. However, these losses still remain relatively low compared with other fraud types.

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Some of our clients have started to use the online electronic signature technology from SignatureLink.com in order to reduce fraud and chargebacks. Not sure of the outcome; however, consumers will have a mindset that their signature is on file. Those impacting "friendly fraud-I did not buy that on the web syndrome".

Massive increase in fraud crimes should make the government and banks realise that their data protection and Chip and PIN systems are failing to deter fraudsters. Rather than combating these systems are diverting fraud to other sectors.

This shows that fraud will continue to grow until they exploit ID KEY system described on website www.xwave.co.uk to make signature and PIN systems reliable and foolproof. ID KEY and PIN system will deter fraud crimes while Chip and PIN system diverts fraud to other sectors.

Fake documents have made our signature system unreliable while skimmers and pin-hole cameras etc. have made PIN system unreliable. We have option to make signatures reliable by personalising them with ID stickers and option to use Card Key Code to make PIN system reliable to make use of stolen and skimmed cards meaningless. By ignoring to exploit this system banks are only letting fraud crimes grow.

ID KEY system will eliminate the need for us to protect our personal and card details since fraudsters will be deterred from misusing these stolen details.

Proposed ID KEY can be treated as a reliable international ID card because it will personalise signature and PIN number to only the right individuals in any country.

From these details it is obvious that fraud crimes will continue to grow until proposed KEY and PIN system is exploited.

If Verified by Visa is effective at containing CNP fraud, why on earth is Visa USA removing the liability shift for various merchant catgeory codes from November 1st?

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