Card fraud declining, but certainly not stopped

The good news is that losses due to credit card fraud in the U.K. have decreased by the greatest percentage since 1999, when the first statistics were released.  The not-so-good news is that companies and consumers are still losing a lot of money as a result of fraud, but the tide may be turning against the bad guys.

In a report published last week, the figures showed the lowest half-year fraud losses on U.K. credit cards in 10 years, down to £186.8 million during the first half of 2010.  This decline is attributed to several factors, including greater and more effective use of fraud detection tools by banks and retailers and the increased sign-up by consumers for extra security on their cards, such as MasterCard SecureCode and Verified by Visa.

Losses from online banking fraud dropped by 36% from the same period last year, down to £24.9 million.  The reasons in this case are believed to be the increased awareness of consumers and their use of protective software on personal computers as well as more and more sophisticated security software used by banks.

Losses due to cheque fraud have also dropped by about 13% in the same half-year analysis, mostly due to the industry’s fraud prevention profiling and other security improvements, but also to the overall decline in cheque usage.

According to the U.K. Cards Association, the incidence of credit and bank card fraud abroad has decreased by half in the last two years, again due mainly to security measures that include monitoring for ‘unusual’ spending.  The increased use of chip-and-pin technology also makes it harder for unauthorized users to beat the system.

Fraud by e-mail phishing is actually on the rise; over 31,000 cases were reported in the U.K. during the first half of 2010.