Internet fuels record credit card fraud

The use of credit cards to buy goods on the internet has prompted record levels of fraud, with more than £400 million swindled so far this year alone.

According to new figures from the credit and debit-card industry organisation, the Association for Payment Clearing Services (Apacs), and the internet's commercial watchdog, the Interactive Advertising Bureau (IAB), 'plastic crime' has risen from £293m in 2000, an increase of more than 36 per cent.

The first shoppers know about the fraud is when their bank statements arrive. All card holders lose out in the long run because banks pass on the cost of reimbursing the victims on purchases costing between £100 and £30,000.

'This is costing them huge amounts of money,' said Mark Terry of the IAB. 'The real worry is that this will deter people from shopping on the net. There are ways of protecting yourselves, some of which are just common sense that you use on the high street.'

Online fraud has risen by 60 per cent, from £5m to £8m which the IAB said was to be expected because internet shopping rose by 76 per cent in the same period. Sales will top £2.75 billion by the end of the year.

Danny Meadows-Klue, IAB chairman and chief executive, said 'Online card fraud is a drop in the ocean compared to total card fraud, but it is increasing. We want to increase consumer confidence by encouraging shoppers to take simple steps to protect themselves. If online traders take the issue seriously more people will shop online.'

Melanie Hubbard, a spokeswoman for Cardwatch at Apacs, said: 'UK banks take online security very seriously. As e-commerce grows, the banks are working alongside retailers and the international card schemes to add further security features and develop new banking services to help this form of trade.'

Of particular concern is the growth of copycat sites that take advantage of consumers who do not know the exact web address of the shop they want to visit.

sarah.ryle@observer.co.uk www.observer.co.uk/uk_news/story/0,6903,545609,00.html