Is UK Card Fraud Up...or Down?

The latest half-yearly fraud figures issued by the UK Cards Association reveal that criminals continue to adapt their behaviour in the face of increasing and more sophisticated fraud prevention and detection methods. Indeed, just as I reflected in this blog back at the beginning of 2010, the target has turned towards identity theft and impersonation, as well as more traditional deception and distraction techniques. In fact, new research from Fellowes indicates that Britons are at greater risk of identity theft than other Europeans.

Should we be concerned? Absolutely. All of us – whether in the UK or elsewhere - should be vigilant when keeping, handling and using our payment cards and associated bank and card details, whether face-to-face, over the telephone or on the internet. And we should be wary of those who purport to represent the bank or an authorised official, because they may simply be practicing confidence tricks on the vulnerable. After all, you wouldn’t hand over your wallet or purse to a stranger, even if they said they were from the bank!

But we should also keep things in proportion and be cautious when reviewing numbers on payment fraud. Payment fraud represents less than one half of a percent of the total fraud perpetrated in the UK. So it remains a relatively rare occurrence. It is easy to get lost when interpreting industry statistics about fraud losses, with comparisons from one period to another often reflecting that losses have gone both “up” and “down”.

The reason for this is the relativity of the numbers. In real terms, UK payment card fraud has fallen by almost 40% since the first half of 2008. Even though the amount of fraud in the period to June 2012 has increased by over £15 million since the same period last year, the amount of genuine spend has increased by far more.

Here’s how the numbers work out. UK card fraud in the first half of 2011 represented 6.6p per £100 of genuine spend, whereas in the first half of 2012 it represented 6.3p per £100. While the growth in card spending means the total amount of fraud losses from cards this year is higher, the percentage of card spending lost to fraud is lower.

So, proportionately, UK card fraud is still on the decline. But the resurgence of compromise activity, especially through online and phone channels, demonstrates that we can’t relax our guard. As the recession rumbles on, so too do the criminal attacks.