The introduction of chip and pin has helped curtail the rise in card fraud for the first time in a decade, new figures showed yesterday. Apacs, the British payments association, said credit and debit card losses fell 13% during 2005, to ?439.4m from ?504.8m the year before, despite chip and pin not being fully in operation.
The fall, which is the first since 1995, is due to the industry's ?1.1bn introduction of chip and pin cards which include a microchip and require users to input a four digit number when buying goods, said Apacs. Fraud due to the use of counterfeit cards fell 25% last year to ?96.8m.
The only area to rise last year was card-not-present fraud - which increased 21% to ?183.2m as criminals targeted goods bought over the internet and telephone. Apacs said increased security measures by retailers meant the rate of increase had fallen for the first time since 2003, but the system was still vulnerable to fraud.
Despite recent headlines on the subject, bank fraud as a result of identity theft fell during 2005. Fraud caused by account takeover or fraudulent applications fell by 17% to ?30.5m. Card ID theft in Britain remains a small proportion of overall fraud at just under 7%. Apacs said chip and pin had helped to reduced cash machine fraud by 12%, although it still totalled ?65.8m.
Sandra Quinn, Apacs spokeswoman, said: "Seeing card fraud losses come down is cast-iron proof that chip and pin is doing its job. In 2002 we forecast that fraud would have risen to ?800m in 2005 had we not acted, so it's heartening to see losses well beneath this figure."
She said organised gangs continued to focus on other crimes. Online banking fraud losses reached ?23.2m in 2005 - almost double the 2004 figure. These losses are mainly the result of "phishing" scams, where customers are contacted by email or phone and duped into disclosing personal security information.