Credit card fraud is back in the news. A recent survey by consumer group Which has revealed that around 1 in 3 card fraud victims have to wait weeks or months to get their money back.
Barclays were found to be the most likely to delay payments and First Direct were the quickest to pay back customers, though even they delayed 17% of payments. Ultimately 98% of those affected by credit card fraud were reimbursed and many consider the banks tactics are unfair. If the bank suspects customers are complicit in the fraud the onus is on the bank to prove it.
Credit Card Fraud on the Highstreet
Credit card fraud is on the rise in the UK with losses amounting to £185 million in the first 6 months of 2012. That’s a rise of 9% on the first half of 2011 (UK Card Association stats).
Common tactics used by fraudsters include distracting customers at shops and cashpoints to steal their cards, or tricking people into handing over their PIN.
More sophisticated techniques focus on targeting payment terminals and cash machines. Techniques such as card skimming and the use of cameras can be used by criminals to obtain card details. Check out this post on PDQ machine security for details. It is important for merchants to comply with the PCI DSS to protect themselves from potential card fraud.
Here is an interesting video demonstrating one type of cards fraud. Using an electronic device attached to a payment card both the payment terminal and card are tricked into processing a payment. It is such evidence that Which have put forward in the defense of those affected by credit card fraud.
It is worth noting that if fraud is committed for a swipe and sign payment where a PIN is not taken the bank is more likely to pursue the merchant.
BBC Card Fraud Feature
The BBC ran a feature recently also highlighting credit card fraud with the focus being on ATMs. In the report they show alternative technologies which are being developed, for instance bio-metrics. Here’s the report: http://www.bbc.co.uk/news/technology-21085738. You may have seen biometrics are being trialed in France as an alternative card verification system.
Advice for Merchants
As a merchant it’s important to be aware credit card fraud is quite common. If you are taking precautions to prevent card fraud you will protect your liability, give customers confidence in your business and have peace of mind.