October 7, 2011 5:44 pm

Chip and pin beats down fraud

Debit and credit card fraud has fallen to its lowest level for 11 years, say banks – largely due to the use of chip and pin security.

This system – which requires customers to input a personal number into a card reader when making a payment, rather than signing their name – has been credited with helping to cut total fraud losses on credit and debit cards to £169.8m in the first half of 2011, the third annual fall in a row.

Fraud committed overseas also fell by close to one-quarter over the same period, as banks monitored customer spending for unusual activity and more countries introduced chip and pin machines.

Banks said the downward trend was due to the investment they, along with retailers, had made in chip and pin technology, as well as improved anti-fraud software and the introduction of handheld “keys” which require a unique code to be input when accessing accounts online.

However the UK Cards Association, an industry group that collects data on credit and debit card use, said attempts by criminals to access consumer accounts, steal identities and forge payments had increased.

Cheque book and telephone fraud rose between January and June, as criminals returned to old- fashioned methods to access money – such as distracting individuals using cash machines, or pretending to be bank employees and asking for account details.

Banks are now reminding customers to follow simple tips to avoid becoming victims of fraud, including installing up-to-date software on computers used for banking and shopping only on websites that display a locked padlock or key symbol in the browser.

Victims of bank fraud in the UK will be repaid any money lost, as long as there is no evidence that they acted negligently.

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