Credit card fraud up by 60%

Credit card fraud has jumped by almost 60% in the past year and annual losses are now around £300m, according to new figures which will increase pressure on the government to find a way to crack down the problem.

Cloning - a scam involving the copying of card data which has stung thousands of people, including the shadow home secretary Ann Widdecombe - accounted for a third of the total, said the Association for Payment Clearing Services (Apacs) yesterday. "That is pretty frightening considering it is a new type of crime that didn't exist until five years ago," said the group's spokesman, Richard Tyson-Davies.

He added that initial figures indicate total losses from credit and debit card fraud in 2000 are "somewhere approaching £300m" - more than double the 1998 figure of £135m. Within the new total, counterfeit fraud has jumped to around £90m.

Cloning, also known as "skimming", involves copying genuine data from the black magnetic strip on one card on to a blank card without the owner's knowledge. An unscrupulous shop assistant or restaurant waiter processing a transaction can quickly and easily record a card's data using a magnetic strip reader as small as a pager.

The sharp rise in card fraud prompted the Home Office to summon key figures from the industry to meetings last year to discuss ways of tackling the problem.

Proposals were put forward for the UK to adopt a system -already used in France - where people paying for goods with plastic simply type their four-digit Pin number into keypads at tills.

Consumers would no longer have to sign receipts under this new regime, which industry insiders expect to be given the official go-ahead within the next two or three months.

The final decision will have to be made by the banks and retailers, with input from the government. The new figures will strengthen the argument for them to move over quickly to the new system. One senior industry figure present at the last Home Office meeting in November said: "It is about how it is going to happen, not if."

In France, which abandoned signatures in favour of punching in Pin numbers a decade ago, the level of card fraud is less than 20% of that experienced in Britain.

The new system would coincide with the launch of a new generation of "smart" credit and debit cards containing computer chips. These new cards are more difficult to clone than traditional cards with a strip on the back.

Mr Tyson-Davies said the current cards were being exploited too easily by fraudsters, who recruit shop assistants, waiters and cashiers who regularly handle cards to copy people's plastic.

Card copying is often done using a hand-held device kept under the counter, out of sight of unsuspecting customers. Mr Tyson-Davies said the resulting counterfeit card can turn up anywhere else in the world at any time.

The National Criminal Intelligence Service has said that organised criminals may be using card crime as a compar atively low-risk way of raising revenue that later funds more violent crime.

It was revealed last month that Miss Widdecombe had fallen victim to card fraud. Barclaycard staff became suspicious about £2,500 spent in a single day at a pub in Shepherd's Bush, west London. It is thought her card was cloned and used for 42 false transactions over a 10-day period.

Credit card users are now being urged to keep a closer eye on their cards, and read their statements carefully, although banks are still liable for all losses from cloned cards.

Switching over to the French system and replacing all the plastic in circulation with the new chipped cards would cost a n estimated £1bn and would involve what one expert said was "a massive education and PR exercise".

Even if it is approved, the new system will probably not be in place until late 2003.