Technology helps to cut card fraud

The use of new technologies is starting to prove effective in the fight against credit and debit card crime, with fraud levels in the UK falling for the first time in nearly a decade.

Credit card fraud losses fell by more than five per cent in 2003 to £402.4m, with even bigger drops expected as chip-and-PIN is rolled out, according to the Association of Payment Clearing Services (Apacs).

Karina Purang, financial analyst at Datamonitor, says technology is playing a key role in helping to drive down levels of fraud.

'The efforts spent by the various players in preventing card fraud have finally paid off,' she said.

'Neural network systems have become standard across the card industry to detect unusual spending patterns and a number of bodies, such as the dedicated cheque and plastic crime unit, have been established to combat card fraud.'

But criminals may be moving their attentions elsewhere. Last year, fraud losses resulting from identity theft rose by 44 per cent to reach £29.7m. Purang says the UK's lack of an identity card is partly to blame.

'The UK has been successful in tackling fraud, but more can be done. The UK needs to look to other countries for best practice in anti-fraud measures,' she said.

One of the main areas of fraud growth is in card not present (CNP), which along with counterfeit, lost and stolen cards, accounts for 80 per cent of all losses.

CNP fraud has risen nearly 300 per cent since 1999 to £116.4m in 2003, and ATM fraud increased from £29.1m in 2002 to £39m last year.

But while technology is playing a crucial role in some sectors, other methods employed by banks are decidedly low-tech, such as simply reducing the daily withdrawal limit on cash machines.

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