New figures released today, Thursday 6 October, suggest that banking industry initiatives are successfully driving fraud away from customers’ cards and bank accounts. Fraud losses on UK cards and cheques fell in the first half of 2010, compared with the same time last year. Online bank account fraud also fell during January to June 2010 – the first decrease in this type of fraud since 2007.

This is according to Financial Fraud Action (FFA), a UK based organisation which works in partnership with the UK Cards Association on industry initiatives to prevent fraud on credit and debit cards.

But, while card and online banking fraud losses may have fallen, cheque fraud and phone banking fraud losses have actually risen, claims PwC.

The FFA’s report suggests that total fraud losses on UK cards fell to £186.8m between January and June 2010 – a 20% reduction compared with losses in the first half of 2009.

This, they say, is the lowest half-year total for ten years, attributing this sustained fall to the success of a series if counter-fraud banking industry initiatives.

Online banking fraud losses totalled £24.9m in January to June 2010 – a 36% fall on the 2009 half-year figure, the report continues. A variety of factors are believed to have contributed to the fall in online banking fraud, including increased customer awareness of the need to protect their own computers with up-to-date anti-virus software and banks’ use of sophisticated fraud detection software.

However, over the past five years fraud losses in this area have been fairly volatile over a six-month period so this decrease is not necessarily the start of an ongoing trend, the FFA warns.

Phone banking fraud losses totalled £5.8m during January to June 2010, an increase of nine per cent from January to June 2009. Most losses involve customers being tricked into disclosing security details - through cold calling or fake emails - which the criminal then uses to commit fraud.

To help customers protect themselves the industry continues to highlight the fact that banks will never cold call or email customers and ask them for login details and passwords.

Melanie Johnson, chair of The UK Cards Association, which represents UK credit and debit card issuers said: "These figures are testament to the importance that the UK’s card companies place on driving down card fraud losses and reducing any inconvenience to customers. We are determined to make sure that customers feel as safe and secure as possible when they use their cards. To that end the banking industry is committed to detecting and preventing card fraud in all its guises.”

Fraud figures released by the National Fraud Authority (NFA) earlier in the year also serve to put these banking fraud losses into perspective. The NFA estimated that fraud in all its guises costs the UK more than £30 billion a year – card and banking fraud accounts for less than two per cent of this figure.

Ultimately though, customers are paying increasingly for security. “While these numbers look very encouraging it is important to recognise the price customers have to pay for safe online banking, “ explains William Beer, a director in PwC's Information and Cyber Security practice. “Two-factor authentication has now become common, with customers having to carry a keyfob or other device in order to log into their bank accounts. While this has lessened the risk of fraud, it has introduced an element of inflexibility into the system and should not be seen as a silver bullet.

“The fact that the banks are doing such a good job in protecting their customers and themselves from online fraud, means that organised criminals are now moving more towards other, possibly softer targets, such as the European Carbon Trading Market. It is also important to note that cyber-crime is global, as are many of the banks that criminals target, so figures based solely on UK fraud might not tell the whole story.

The internet represent a massive challenge shared by public and private sectors worldwide, he continues. “To meet the imperatives of the cyber era, we believe that public and private sector organisations will need to adopt new structures, roles and governance, while also engaging in close and continuing collaboration around the cyber agenda with other organisations."

David Cooper, chairman of the Fraud Control Steering Group, the payment industry’s fraud prevention group, said of the non-plastic related fraud losses: “The fight against fraud can only be effective with a joined-up approach, so we continue to collaborate with businesses, consumers, the police and the government whenever and wherever possible. Just last week our work with the Police Central e- Crime Unit (PCeU) paid off, with a number of criminals - who infected customers' computers with a virus to steal from their accounts - being arrested."

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