Fraudsters take advantage of chip-and-PIN rollout

Fraud from new credit cards being sent to customers in the mail and intercepted by fraudsters soared 51 per cent over the last year, as criminals took advantage of the high volume of chip-and-PIN cards being mailed out to consumers.

The Association for Payment Clearing Services (Apacs) says card fraud rose 18 per cent to £478.8m in the year to June 2004, according to a report in the Financial Times.

8m cards are being mailed out to customers every month as part of a national programme to replace the nation's 130m credit and debit cards are replaced with chip-and-PIN-enabled cards.

The fraudsters are able to take advantage of a grace period in the rollout of chip-and-PIN whereby retailers don't force customers to use their PIN code if they've forgotten their codes.

Apacs also noted that ID fraud - criminals applying for new cards or taking over existing accounts - had grown by 66 per cent to £37m during the year, with fraudsters rifling rubbish bins as the primary source of the increase.

'There is a feeling that there is a concerted effort among criminals to get even more money out of the system ahead of chip-and-PINs introduction,' said a spokeswoman for Apacs.

Meanwhile, card not present fraud, which is typically internet-based transactions, rose by 29 per cent to £138.8m, according to Apacs.

ACI Worldwide card fraud expert Martin Hewgill says the proper system for avoiding interception fraud is secure delivery or card activation.

'Here, the legitimate card holder must apply to the issuer to get the new card working. Usually, the cardholders are required to supply a piece of secure information, such as the card security number from the back of their old card, thus providing their legitimacy,' said Hewgill.

See also:

Chip and Pin will force fraudsters online

Enhanced credit and debit card security bad news for e-businesses  26 Nov 2004

UK's chip-and-PIN rollout on schedule

Christmas will be first big trial for the technology, predicts analyst  03 Nov 2004

Apacs launches consumer advice site about online threats

Banking sector is working with the High-Tech Crime Unit to clamp down on crime  04 Oct 2004

SME Business Centre

Smaller businesses want technology to help them punch above their weight in a global market where their main competitor could be on the other side of the world  22 Sep 2004

Co-operation is vital to tackle hi-tech criminals

The fight against cybercrime has gone global, says the chief of the National Hi-Tech Crime Unit  16 Sep 2004

Technology helps to cut card fraud

Fight against card crime finally starting to pay  01 Sep 2004

Fraud prevention tactics starting to pay off

But identity fraud could rise as a result  26 Aug 2004

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