Online banking fraud rises sharply

online banking fraud losses are up 44 per cent

Online banking fraud losses have increased 44 per cent from £23.2m in 2005 to £33.5m in 2006 according to figures released by banking body Apacs today.

Total card fraud losses fell by three per cent in the past year to £428m – a decrease of nearly £80m over the past two years. This fall has been driven by a 13 per cent decrease in UK domestic fraud and the combined reduction of more than £45m in mail non-receipt and lost and stolen fraud.

'These figures clearly show that there is no one-size-fits-all approach to dealing with fraud.' said Sandra Quinn, director of communications at Apacs.

'Chip-and-PIN has had a hugely positive effect on fraud losses over the counter in UK shops and stores, but we are seeing more fraud on transactions that do not use chip-and-PIN – such as over the internet and phone, by mail order and abroad in countries that have not yet fully upgraded to chip-and-PIN. '

The introduction of chip-and-PIN has made it more difficult for fraudsters to commit card fraud in the UK, with losses at UK retailers falling by £146.7m over the past two years.

Over the same time period, card-not-present fraud losses have increased by 16 per cent and now account for just under 50 per cent of all card fraud losses

'Fighting fraud is never going to succeed with a single-layered approach. It requires different sectors – including public and private – to work together on developing and implementing strategies, sharing best practice and, most importantly, sharing data,' said Quinn.

'We need government intervention to remove the current barriers to this and we welcome improvements proposed in the Fraud Review and the Serious Crime Bill.'

The banking industry is working on the next generation of fraud prevention systems to help tackle fraud in non-face-to-face transactions.

Apacs is liaising with banks, card providers, retailers, trade associations and systems vendors on the implementation of a trial of a card reader solution that builds upon chip-and-PIN technology and will enhance the online protection already offered by systems such as MasterCard SecureCode and Verified by Visa.

On top of this, the payments industry continues to commit and invest funds in programmes and initiatives to fight fraud. Over the past five years, the industry has invested £1.1bn in the rollout of chip-and-PIN.