Online criminals are helping to fuel card fraud far beyond previous estimates, according to new research.

UK payment association APACS reported that losses caused by "card not present" fraud – involving transactions conducted over the phone, internet or mail – totalled £290.5m in 2007.

But a joint investigation by the BBC and security firm The 3rd Man Group has found that the true figure came to £500m, if failed attempts were factored into account.

The introduction of chip-and-PIN caused major headaches for card fraudsters, said 3rd Man chief executive Paul Simms. But this has shifted criminal attention to areas where a user does not have to be physically present at the point of purchase.

"Card not present fraud is a major problem which is not going away and clearly is getting worse as criminals increase their efforts to steal from retailers,” said Simms.

“We aren’t just talking about petty thieves and opportunists here. This money also funds illegal drugs, organised crime and terrorism.”

Overall card fraud rose 25 per cent in 2007 to a total loss of £525m, according to APACS.