Card fraud reaches record high

Card fraud in the UK continued to climb in 2002, with a record of just under ?425m of fraudulent transactions made compared with ?411.5m the year before.

Figures released today by the Association of Payment Clearing Services (Apacs) show that counterfeit fraud is still the largest area of fraud, amounting to losses of ?148.5m last year. 'Card not present' fraud, where a credit card is use to pay for goods over the phone or internet, for example, totalled just over ?110m while lost and stolen card fraud accounted for just over ?108m.

London is the country's hotspot for credit card fraud, with over ?95m worth of fraud conducted in the city in 2002. The next highest fraud hotspots were Birmingham and Manchester, where ?8m and ?6m worth of fraud were carried out respectively.

"More than ?1m-worth of card fraud is committed every day - that's a fraudulent transaction every eight seconds," said Chris Pearson, chief executive of Apacs.

The release of the figures coincides with the launch of a new initiative in which banks, building societies and retailers have joined forces to combat card fraud. The Chip and PIN programme aims to introduce a more secure way for people to use debit and credit cards, and will start with a trial in Northampton in May.

Under the new system, customers will verify their purchases by keying in a four-digit Personal Identification Number (PIN) rather than signing a receipt. Smart chips will replace the magnetic strips currently used on cards, as the former can store information more securely.

Around 1,000 retailers in Northampton and all the major high street banks and building societies are participating in the trial of the new system. The full UK Chip and PIN programme will see more than 850,000 retailer terminals, 122 million cards and 40,000 cash machines upgraded by 2005.

Cardholders will not need to take any action as they will be issued with the new type of card by their bank or building society when the system is ready.