UK consumers are likely to suffer the indignity of more phone calls from the bank to check their card transactions are legitimate after a new report revealed card fraud has reached record levels.
The analysis from FICO (based on Euromonitor figures) reported that in 2013 UK card fraud rose 16% to a record £450m, beating the previous record set in 2008.
According to the study, the success of chip and pin is driving fraudsters to other methods, with the single biggest issue in the UK being card-not-present fraud. Counterfeit cards, postal theft, and ID fraud have all dropped.
Even more worrying for UK consumers is that the country accounts for nearly 35% of £1.2bn worth of fraudulent transactions recorded in the study, which covers 17 European countries, plus Russia and Turkey. Only France came anywhere close to this level, with 27%.
“These losses are a wake-up call that should start a new wave of anti-fraud initiatives by regional bodies and card issuers,” said FICO fraud consultant Martin Warwick.
“After the previous peak, in 2008, this led to new fraud migration patterns. Unfortunately, many organisations do not maintain continuous investment in fraud prevention systems and staff they invest only when the problem grows. The companies and countries that aren’t investing this year will be the new targets for criminal activity.”
The fact that the UK and France accounted for 62% of all the fraud suffered reflected the higher use of cards in those countries, said Warwick.
“When fraud losses peaked in 2008, UK issuers sharply reduced card fraud through chip and pin and fraud analytics,” said Warwick. “However, tougher fraud detection policies and thresholds also block more genuine transactions, and now the focus for UK banks and regulators is very much on improving the customer experience.
The UK is now likely see more automated real-time checking, such as phoning up customers to verify transactions, he said. “This technology helps balance the need to protect customers from fraud with the need to provide a positive purchase experience.”
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