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Last Updated: Wednesday, 3 October 2007, 11:00 GMT 12:00 UK
Surge in credit card fraud abroad
Credit card
Cards are increasingly being cloned and used abroad to commit fraud
Fraud on UK credit and debit cards has risen again, driven up by the use of counterfeit cards in foreign countries.

The banking payments body Apacs says fraud abroad rose by 126% in the first half of the year, compared with the first six months of 2006.

That in turn drove up losses due to all credit card fraud by 26% to 264m.

Apacs says fraudsters are being forced to copy stolen cards and then use them abroad because the chip-and-pin system has made fraud in the UK harder.

"These figures show how the fraudsters have changed tack," said Sandra Quinn of Apacs.

"A couple of years ago they were mainly stealing cards and card details for use in UK shops and cash machines.

"But today, because of chip-and-pin, they have been driven overseas - using fake magnetic stripe cards specifically in countries which have yet to upgrade to chip-and-pin," she added.

Changing patterns of fraud

This latest trend appears to be reversing the drop in overall card fraud seen in 2005 and 2006.

Last year, losses suffered by financial institutions, retailers and individuals fell by 3% to 428m.

But as well as a surge in the use of counterfeit cards abroad, there has a been a rise in losses from fraud where the card is not present, such as online, phone or mail order transactions.

These have shot up by 44% to 137m in the first half of the year.

Apacs argues that this has been driven by the increasing volume of internet shopping.

Successes

Anti-fraud measures, principally chip-and-pin, are showing success in other areas once regarded as a big problem.

Losses due to cards being stolen in the post have been halved to just 5m in the first half of the year.

And losses due to stolen cards being used to take out money from cash machines have also slumped, by 57% to 17m.

Overall this contributed to card fraud in the UK dropping by 4%, but fraud abroad soared because of the use of counterfeit cards.

The banking industry says that the amount of online banking fraud is also being driven down by increased security measures.

So far this year two big UK banks - Barclays and Royal Bank of Scotland - have started issuing card readers as extra security devices to customers who use their online bank accounts.

The Apacs figures show a drop of 67% in online banking fraud, to 8m in the first half of the year, despite a surge in so-called phishing incidents reported to the authorities.

Phishing frauds typically involve customers being fooled by fake e-mails, claiming to be from a bank, which lure the customers into revealing their bank or credit card details.



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