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Credit Card Fraud
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Credit card fraud – A guide to protecting yourself
By Becca Talbot
becca.talbot@consumerchoices.co.uk
Overall, Britain’s debit and credit card fraud rates are decreasing. Total card-fraud losses in 2006 were £428 million, down from £440 million the previous year, thanks by and large to chip and PIN.
However, figures from financial services APACS show that nearly half of the total - £213m – came from CNP fraud, fraud where the card, or cardholder were not present.
Our comprehensive guide will give you the low down on credit card fraud, what to look out for and how to protect yourself.
What is fraud?
Fraud is a growing crime in the UK, and more and more of us are falling victim to it. Everyone is susceptible, however recent findings by fraud prevention service CIFAS revealed that the average age of a male identity fraud victim is 47, while the age for women is 43.
This doesn’t mean if you’re not these ages you should be any less careful, quite the contrary in fact. If you do your shopping or banking online, purchase things by mail order, or even over the telephone, you could be at risk of credit card fraud.
And identity fraud can happen anywhere, to anyone. Fraudsters could contact you pretending to be from a legitimate organisation, or could get your details from discarded receipts or bank statements, costing taxpayers £1.3 billion a year according to the Home Office.
On top of this, the sense of violation felt by victims of fraud, as well as the hassle and frustration of waiting for cards to be replaced and funds to be reversed, is enormous. As a result, we are becoming more conscientious about the security of our credit cards and personal details.
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Types of card fraud
- Lost and/or stolen card fraud – This type of fraud occurs when your card is physically stolen from your wallet or home, and then used by someone pretending to be you. Most fraud of this type will happen before you have reported your card lost or stolen, which is why it is important to contact your card provider as soon as you realise your card is missing.
Thankfully, figures have shown that fraud of this nature has been slowly declining since the arrival of chip and PIN.
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"Fraudsters could get your details from discarded receipts or bank statements..."
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- Counterfeit card fraud – Also known as skimming, counterfeit cards are cards that have been printed, embossed or encoded without permission from the card company, or cards that have been validly issued but then altered or recoded.
The majority of cases of counterfeit fraud involve a process called skimming, where the data on a card’s magnetic strip is digitally copied onto another card, without the legal cardholder’s knowledge. This can happen anywhere, but in particular bars, restaurants and petrol stations – places where your card isn’t always visible. It can also happen at cash machines, where the machine has been tampered with, and a skimming device fitted.
Often you will be unaware of any fraud until your card statement arrives, showing purchases you haven’t made. It is important to check your statements every month.
- Card not present (CNP) fraud – This type of fraud can happen over the internet, the telephone, or by mail order. In fact, any occasion where the card doesn’t have to be physically present. Fraudsters can obtain your card details from discarded receipts, or by copying down your details during a transaction.
Now the most common type of fraud in the UK, the problem with countering it is the fact that neither you nor your card has to be present during the transaction. This means that:
- CNP businesses aren’t able to check the physical security features of the card to ensure it’s genuine
- It is not easy to confirm that the customer is the real cardholder because a signature or PIN number isn’t needed
- Card providers cannot guarantee that the details given in a CNP transaction have been given by the real cardholder.
- Mail non-receipt card fraud – If your card has been stolen during transit, after it has been sent out by your bank or building society, it is called mail non-receipt fraud. People living in properties with communal letter boxes, such as flats and student (http://www.creditchoices.co.uk/student-credt-cards.html) halls of residence, are particularly at risk.
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Identity theft on cards
Identity theft can lead to criminals’ using your fraudulently-obtained personal information to open or access card accounts in your name. There are two types of this kind of fraud:
- Application fraud – stolen or false documents used to open an account in your name.
- Account take-over – personal information obtained fraudulently is used to take over the running of your account. By pretending to be you, the fraudster will try to deceive your bank or card issuer, and arrange for payments to be taken from the card, or for details such as PIN number or address to be changed.
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What protection do I have against fraud?
Banks are adamant they don’t want people to close their accounts because of security concerns, so many now offer fraud protection services as part of their packages.
If you do become a victim of identity fraud, then subject to your bank’s terms and conditions, you won’t have to pay for any purchases that have been made without your permission. However, if it can be proven that you acted without reasonable care, by keeping your PIN number in your purse for example, you may not be offered any protection by your bank.
The table below shows three of the most popular credit card providers offering fraud protection:
| Credit card provider |
What's on offer |
| Capital One Credit Cards |
With Capital One credit cards, card holders will benefit from Identity Theft assistance, at no extra cost. |
| Barclaycard Credit Cards |
All eight cards available from Barclay’s offer an identity protection service, and fraud protection. |
| HSBC Credit Cards |
HSBC cards come with five security measures to keep your funds safe: customers benefit from a fraud detection system, global assistance and chip and Pin technology. Cardholders can also register for a private code through MasterCard secure, giving added protection when shopping online – if the card is used for online purchases without your consent, you won’t have to pay. |
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Online/Offline protection
If you have the internet, setting up online banking is a quick, easy and safe way to keep tabs on your finances. There are three things that you should be aware of though:
- Be aware of the software – Make sure your computer or laptop has the latest anti-virus software installed, and that your personal firewall is enabled.
- Be aware of security - When shopping or managing your finances online, always make sure that there is a padlock icon in the bottom right-hand corner of your browser window, and that there is a an ‘s’ after the http of the address, e.g. https://www.amazon.co.uk/, as these both indicate that the site is secure.
- Be aware of ‘phishing’ – The term ‘phishing’ refers to fraud that arrives by email, posing as your bank to trick you into giving out your details. In the first half of this year, according to APACS, phishing incidents rose by 1,471%.
Banks will never ask for personal finance details via email. If you get an email that claims to be from your bank requesting such information, be wary of emailing back with your details. It is better to contact them directly, by visiting your nearest branch or by phoning your customer helpline.
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Credit card vs. Debit card protection
When it comes to protecting yourself from unauthorised use and charges, credit cards will offer a lot more protection compared to debit cards.
Debit card losses can take weeks to recover after being reported to the card issuer, leaving your account empty while the bank investigates, meaning you are susceptible to further charges from your bank.
And if you don’t regularly check your bank statements, you could be totally liable for all fraudulent debit card charges if you wait 60 days or more from the time your statement is mailed to notify your card provider.
You may be able to get additional protection against fraudulent use of your credit or debit cards through your homeowner's or renter’s insurance. Check your policy or with your agent for more information about your coverage.
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Our Recommendations
The first and foremost thing you should do if you’re concerned about card security, is read our article 10 Tips On Avoiding Credit Card Fraud for advice on how to protect yourself and your finances from fraudsters. And Andy Williams, our Online Savings Expert at CreditChoices.co.uk, has just published a new article on credit card fraud.
If you’re moving house, you should have all your post redirected. The Royal Mail charges £24.90 to redirect your post for six months, providing a cheap and easy way to make sure your mail doesn’t get into the wrong hands.
Keep a check on your credit score (go to link), because there is a danger that criminals will use people’s personal details to apply for credit in their name. A number of organisations allow you to check your credit score. And many also offer monitoring services which will alert you if anyone applies for credit using your details.
The Capital One credit card offers free fraud protection. Should anyone attempt to apply for credit in your name, Capital One will alert you immediately, thus significantly reducing the likelihood of a fraudulent act taking place.
Chris Eagle, from ConsumerChoices.co.uk says: “If you are conscious about fraud prevention, you should be able to manage your finances with confidence. Don’t be intimidated into avoiding ATMs and shopping online, they can both be tackled safely and securely if you take the necessary preventative steps."
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