Chip and pin, the system intended to make paying for goods and services safer, is being increasingly targeted by criminals overseas.
Card fraud abroad is up 77 per cent, meaning that even if you’re not going away on holiday this year, your card details might be. Criminals are sending UK card information to countries that do not yet use the chip and pin system.
The US, which has not adopted the technology, has become the most popular country for fraudsters using UK cards.
Since 2005, fraud there has risen 118 per cent. By contrast, France and Spain, which do use the system, have seen a decline in plastic fraud.
Apacs, the UK payments association, says the fraud landscape is changing thanks to chip and pin, which relies on a microchip embedded in cards to authorise payments rather than signatures.
Apacs says the system has cut UK high street card fraud by 67 per cent since 2004, when it was introduced.
However, the technology has not eliminated card fraud altogether. Criminals are changing the way they act on the information they obtain and are making fraudulent transactions in foreign countries, or where cards are not present, such as for online purchases.
Police in Birmingham raided a factory this week in which criminals had obtained chip-and-pin mach-ines. It is thought the gang was planning to tamper with the machines by attaching devices that would then record the numbers tapped in by customers.
Mark Bowerman at Apacs said criminals cannot copy the chip within the cards, but can copy the magnetic strip on the back of cards and attach this to another card which can then be used in countries where chip and pin is not used.
The figures involved are significant. Last year, fraud on UK cards amounted to £535m and banks are taking the situation very seriously. They have attempted to deal with the problem of copied cards by setting up teams to track suspicious behaviour and contact customers if they believe a card is being used fraudulently.
Apacs says it is therefore essential that customers provide their banks with up to date contact numbers.
For the most part, the cost of fraud is not met by cardholders, who are protected under the Banking Code.
Banking organisations say the interest lost in these circumstances should also be paid by banks, but consumer groups say this rarely happens automatically.
The Financial Ombudsman still sees around 100 cases of complaint a month, many arising because banks have not paid money back to customers.
Apacs maintains that cards are always safer than cash when making payments and points out that the chances of a cardholder becoming a victim of card fraud are still low. Fraudulent transactions make up 0.12 per cent of all transactions, by value.
The Home Office recommends that, to further reduce the chances of becoming a victim, cardholders should be alert at all times when they use cards, should dispose of personal documents carefully and check statements. There is further information on what to do if you think you have been a victim of fraud at www.cardwatch.org.uk.
