The tide continues to shift in favor of the payments industry in the United Kingdom’s battle against card fraud.
Overall credit and debit card fraud losses declined for the third consecutive year last year, even in card-not-present settings, according to new data from the UK’s top fraud-fighting authority.
But as high-tech measures to block fraud begin to take deeper hold, low-tech card-fraud, such as phone scams duping cardholders into revealing their card data, is on the rise, Financial Fraud Action UK said in a March 7 press release.
The biggest decline was in counterfeit card fraud and card identification theft, which the introduction of EMV card technology has helped to block, the organization said. The UK broadly adopted chip-and-PIN card technology in 2006.
The U.S. payment card networks this year moved to introduce EMV card technology over the next five years (see story).
While the UK continues to battle fraud, the region’s growing reliance on EMV card technology and other online transaction protections, including two-factor card authorizations for online transactions, appears to be succeeding in driving down fraud levels where losses are highest, the organization said.
Overall fraud losses associated with UK credit and debit cards last year declined 6.7%, to £341 million (US$532 million) from £365.4 million in 2010, the nonprofit group says.
Counterfeit card fraud declined 24.2%, to £36.1 million from £47.6 million a year earlier, which the organization attributes to “continued upgrading of the chips on UK cards” along with “retailer awareness of good practice to safeguard their chip-and-PIN equipment.”
Card-not-present fraud, including card fraud on transactions conducted online or by phone, continues to represent the lion’s share of all UK card fraud. But such fraud declined 2.6% last year, to £220.9 million from £226.9 million in 2010, a significant sign of progress, the group said.
A variety of factors led to the overall decline in fraud, but growing use by consumers of online card-protection programs, including Verified by Visa, MasterCard SecureCode and American Express SafeKey, played the most a significant role in deterring card-not-present fraud, a spokesperson for the UK’s fraud-fighting organization tells PaymentsSource.
And the improvement in fraud rates occurred despite an 80% increase in criminals attempting to steal consumer payment data in phishing attacks in the UK in 2011 compared with the previous year, the organization said.
The amount of card fraud conducted by spear-phishing, in which criminals target specific individuals through bogus phone calls or fake emails and dupe them into disclosing sensitive payment data, rose 31.5%, to £16.7 million from £12.7 million, according to the group.
But “successful campaigns to raise customer awareness of fraud protection” also had a positive effect, as card identification theft fell 41%, to £22.5 million from £38.1 million, the group said in its announcement.
Fraud from lost and stolen cards, which chip-and-PIN technology cannot completely prevent because many low-ticket transactions may be authorized without a PIN, rose 12.8%, to £50.1 million from £44.4 million.
Fraud from cards intercepted or recipients failed to receive in the mail rose 34.5%, to £11.3 million from £8.4 million.
“As technological advances have made our payments more secure, we’ve seen a spike in more simplistic crimes,” Paul Barnard, head of the UK’s payment card industry Dedicated Cheque and Plastic Crime Unit, said in the release.
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