Credit and debit fraud has experienced the largest decline in online transactions since the introduction of online banking and e-retailing to Britain. This is due to the heavy investment from the payment industry in new fraud detection technology.
Figures from the UK Cards Association show that criminal losses in credit and debit cards fell by 9% in the first half of 2011 compared to the first half of 2010, to just under GBP170m, the third consecutive annual decrease. This is a huge fall in payment fraud compared to 2008's peak of GBP304m. Factors that will have contributed to this decrease relate to three different areas of the payment industry: firstly, the consumer being more aware of online fraud; secondly, the provider creating technology to help to prevent fraudulent online activity, such as Visa's 3-D Secure; and, finally, the retailer creating technology that allows purchases to be tracked and therefore unusual activity to be spotted. Internet security is currently an industry concern, and so this decrease in card fraud will be a positive revelation for the general public and the cards industry alike.
Recent Datamonitor research shows that people are most likely to have had their card details stolen online, with 11% having been victims of online card fraud compared to the 5% of people who have had their cards and PINs stolen from ATMs. These figures cover a three-year period spanning 2009 to 2011. Consumers are therefore far more wary of Internet transactions, with 75% of people being concerned about online card fraud (Datamonitor's Financial Services Consumer Insight Survey, 2011).
Datamonitor researcher Olivia McDonnell says: "Due to this concern around Internet security, banks such as NatWest, the Royal Bank of Scotland, and Lloyds have created their own security systems to ensure their customers' details are kept safe and to minimize the chances of online fraud. Due to these improved prevention methods, however, criminals have reverted to using more basic techniques, with some success. The method is often simply telephone phishing: attempting to acquire sensitive information such as usernames, passwords, and credit card details by masquerading as a trustworthy entity, which contributed to a 48% increase in telephone fraud in the first half of 2011. This kind of pattern is seen often; as one element of fraud gets harder to carry out, the criminal moves on to the next one."
"The majority of providers have also issued card readers to prevent online banking fraud, which allows consumers to feel more secure in their Internet banking and shopping transactions. These have been received with mixed reactions; some providers insist on the card readers being used for all online banking transactions rather than specific high-security ones, which takes away the freedom of people being able to do online banking whenever and wherever they choose unless they carry their card reader with them. Although these prevention measures have saved banks huge amounts of money, this seems to be at the cost of consumers' convenience. There appears to be a fine line for customers between online banking security being a necessity and being a nuisance."