Fraud losses drop on cards, cheques and online banking

New figures show that banking industry initiatives are successfully keeping the fraudsters away from customers’ cards and bank accounts. Fraud losses on UK cards, cheques and online banking all fell in 2010 compared with 2009.

Total fraud losses on UK cards fell to £365.4 million in 2010 – a 17 per cent reduction compared with losses in 2009. This is the lowest annual total since 2000 and follows on from a fall of 28 per cent in 2009. This current downward trend is due to the banking industry’s ongoing investment to deter, detect and prosecute fraudsters.

Initiatives include: better awareness amongst retailers about how to protect their chip and PIN equipment from criminal attack; greater sign-up to online fraud prevention initiatives such as MasterCard SecureCode and Verified by Visa by cardholders and retailers; improved industry sharing of fraud data and intelligence; increasing use of fraud detection tools by banks and retailers; the increasing roll-out of chip and PIN abroad and the upgrade of chips on UK cards.

Online banking fraud losses totalled £46.7 million in 2010 – a 22 per cent fall on the 2009 figure. Factors contributing to this fall include customers better protecting their own computers with up-to-date anti-virus software combined with banks’ use of sophisticated fraud detection software.

This decrease has occurred despite a continuing rise in phishing attacks, up 21% from 2009.

Phone banking fraud losses totalled £12.7 million during 2010, an increase of five per cent from 2009. Most losses involve customers simply being tricked into disclosing their personal security details - through cold calling or fake emails - which the criminal then uses to commit fraud. This suggests that some customers are still not aware that their bank will never cold call or email them to ask for login details and passwords.

Cheque fraud losses decreased from £29.8 million in 2009 to £28.9 million during 2010. The vast majority of attempted fraud gets stopped before the cheque is paid. The industry’s ongoing work to prevent cheque fraud has helped drive these losses down. The continuing drop in cheque usage has also contributed to the three per cent fall in overall cheque fraud losses.