A sharp hike in the volume and sophistication of phishing scams pushed British online banking fraud losses to record levels of £23 million in 2005 - almost double the previous year's losses of £12 million, APACS, the U.K. payments association warned yesterday.
The organization's latest plastic card monitoring research shows that the only area of card fraud to rise was that of internet, phone and mail order transactions - known as card-not-present or CNP fraud. This was found to have jumped to £183 million from £151 million in 2004, an increase of 21 percent.
However, the rate of increase was found to have fallen for the first time since 2003, in part thanks to the increased use by retailers of checks on cardholder addresses and the three extra digits on the signature strip, and also online initiatives like Verified by Visa and MasterCard SecureCode.
Following rises in previous years, APACS reported 2005 saw a fall in the level of card ID theft. Fraud caused by either account takeover or fraudulent applications fell by 17 percent to £30.5 million (£37 million in 2004). Card ID theft in the UK remains a "very small proportion" of overall fraud at just under seven percent, the organization noted.
Overall APACS noted that total card fraud losses fell by 13 percent compared to 2004 (£439.4 million in 2005 compared to £505 million in 2004). This fall is attributed to chip and PIN which has already resulted in a reduction of nearly £60 million in combined counterfeit and lost and stolen card fraud losses – a fall of 24 percent - and in mail non-receipt fraud, which fell by 45 percent.
Sandra Quinn, director of corporate communications at APACS, comments "Seeing card fraud losses come down is cast-iron proof that chip and PIN is doing its job. Back in 2002 we forecast that fraud would have risen to £800 million in 2005 if we didn't make the move to chip and PIN so it's heartening to see total losses well beneath this figure. Of course, whilst our cards are safer than ever before, the fraudsters clearly aren't going to give up so neither will we."
"Now chip and PIN is in place the banking industry is discussing how to leverage chip and PIN to better protect card-not-present transactions, and we hope this will lead to progress later this year about what this means for cardholders and retailers."
APACS advised that help and advice about preventing online banking fraud is available at www.banksafeonline.org.uk. The site also contains updates on the latest scams, and enables consumers to report any suspicious emails or websites.