Page last updated at 09:03 GMT, Saturday, 17 January 2009

Card fraud crackdown accelerated

Credit cards
Holidaymakers are advised to take several different payment methods

A leading bank is introducing new technology which will mean that every credit card transaction will be scrutinised for fraud.

HSBC is introducing the programme, which will affect 10 million card accounts and millions of transactions.

The banking industry has warned that more legitimate transactions will be queried or cancelled as a result.

Card fraud is rising - up 14% in the first half of 2008 - and fraud abroad now accounts for 40% of all card crime.

Travellers are being advised to take several different payment methods, including cash, credit cards and travellers' cheques when they go abroad.

Card fraud is an arms race - banks will come up with one way of dealing with it, the fraudsters will come up with a way round it
Bart Patrick, SAS UK

After several years of falling numbers, card fraud started rising again in 2007. Latest figures show that card fraud could have exceeded 600m in 2008, and banks are using increasingly sophisticated systems to try to outwit fraudsters.

HSBC previously checked 25% of card transactions but is currently rolling out a system that means all card transactions will be screened in real time, with a decision made in a fraction of a second.

Bart Patrick of SAS UK, which is providing the software system for HSBC, said: "When you put your card in the machine it's carrying out an automatic check against your pattern of normal use - and making a decision about whether that is real or fraudulent."

He said banks were constantly battling with fraudsters to reduce the levels of crime.

"Card fraud is an arms race. The banks will come up with one way of dealing with it, the fraudsters will come up with a way round it."

"What we have seen with chip and pin - it was successful for 18 months, two years - the fraudsters have worked a way round it, so we are now looking at more sophisticated means."

Holiday problems

However as the banks become more proactive in targeting fraudsters, more people could find their legitimate transactions are declined or queried.

When Sally Wiber went on holiday to Borneo, she followed industry advice and told her bank where she was going.

But her credit and debit cards were blocked when she tried to use them on her first day.

"I spent much of the first day trying to deal with my bank and getting internet access, and then had a rather frustrating phone call trying to make sure that I could use my cards for the rest of my holiday," she said.


A customer explains how she faced delays using her cards

But Mark Bowerman of the card issuers' trade body APACS said it was something consumers would have to accept.

"If we as customers expect banks to do something about this we have to expect that from time to time we'll be in a shop and the transaction will be queried or card declined."

"These systems are designed to stop cards being used fraudulently, so if that's the price we have to pay I think people should be prepared to pay that price," he said.

Spending large amounts of money or using your card frequently can trigger the alarm at the user's bank, and with so much fraud taking place abroad, the same goes for using a card outside the UK.

Sean Tipton, of travel agents' trade body ABTA, said travellers should not rely on their credit card.

"Take a range of payment methods. Take cash for immediate expenses, take two cards, preferably from different banks and take travellers' cheques as well for extra security if it goes disastrously wrong."

Ms Wiber's bank, HSBC, said that most of the time when it blocked a card incorrectly, the problem was remedied very quickly.

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