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What is Bank and Credit Card Fraud and how to protect yourself

Learn to Protect Yourself from Bank Card Fraud

Thousands of people fall victim to card fraud every year. According to Financial Fraud Action, in 2015 alone around £567.5 million was lost to fraudsters in the UK. Bank card fraud takes place when criminals manage to steal your bank cards or account information and then use them to take money from your account, process transactions or take out loans and run up credit in your name.

 

Types of Bank Card Fraud

Lost or Stolen Card Fraud

This is when the fraudster will physically steal the bank card either from their victim’s pocket, purse or wallet. They can then use the card for transactions without their knowledge.

credit cards in a wallet

Luckily, most places in Europe require a four-digit PIN number to authorise transactions-however, that doesn’t apply to online purchases. Also, now nearly everybody has a contactless card where a fraudster doesn’t even need the PIN number to use the card in shops. Fortunately, in most places the maximum amount you can spend with a contactless card is around £30 and only around four times a day so there is some sort of limit. Lost or stolen cards can prove very expensive for the victim especially if they don’t notice and don’t report their card as being stolen for a few days.

 

ATM/ Cash Machine Fraud

  1. Skimmer - A ‘skimmer’ device is attached over the card slot of a cash machine and once it’s in place it will record the details from your card’s magnetic strip whilst sometimes using a camera to record the PIN number being entered.

    To avoid this, you should first check to make sure there is nothing unusual about the card machine’s appearance- they are normally spray painted to match the colour of the machine. You should also check for any scratches, tape or sticky residue.

  2. Card traps - This works by a device being entered in to the card slot which then retains your card inside the machine, allowing the fraudster to come back later and retrieve the card.

    If this happens, you should not assume your card is safe and contact your bank to cancel the card immediately.

  3. Hidden cameras - Fraudsters place hidden cameras either on the cash machine itself or anything seemingly normal (like a nearby leaflet stand). These are then used to capture their victim’s card details and more importantly their PIN number.

    To avoid this, you should use your hand to shield your PIN from every angle.

  4. Distraction – This works by fraudsters working together to distract you as you are taking money from a cash machine. One might ‘accidentally’ drop something near your feet whilst the other one takes the card or money from the machine as you’re not looking.

    Do not let yourself get distracted and If you notice anyone hovering nearby and acting suspiciously you should choose another machine and report them to the police.

 

What is Counterfeit Card fraud?

Fraudsters can illegally manufacture fake bank cards encoded with the account information that they have stolen from the magnetic strip of somebody else’s card. The fraudster can then use the card to carry out unauthorised transactions in countries where the chip and PIN system is not supported. They can also use the card for online or telephone transactions.

 

What is Card ID Theft?

This type of fraud occurs when a criminal uses a fraudulently gained card or account details, along with stolen personal details to open or take over an account in somebody else’s name. Account Takeover occurs when the fraudster can also use this information to phone their victim’s bank, pose as them and either arrange for funds to be taken out of the account or change the home address to have new bank cards sent to them which are then used fraudulently.

 

What is Card Non-Receipt fraud?

This type of fraud is when the card is stolen in transit- so after the card has been sent from the card company and before the card reaches the rightful cardholder. The PIN number is normally sent with the card itself so if it falls into the wrong hands they have everything they need to start using it for fraudulent transactions. People who live in communal properties, such as flats and student accommodation, and people who do not get their mail redirected when they move to a new house are particularly vulnerable to card non-receipt fraud.

 

What is CNP (Card Not Present) fraud?

This type of fraud happens when card information is obtained by the criminal through things like bank statements or discarded receipts. This information is then used for fraudulent transactions that don’t require the physical card to be presented, for example online or over the phone. This often remains undetectable until the victim notices payments leaving their account which they didn’t authorise.

 

Annual Fraud Losses on UK-Issued Cards between 2006 and 2015

FRAUD TYPE 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 %
Change
14/15
Remote                      
Purchase (CNP) 212.7 290.5 328.4 266.4 226.9 220.9 246.0 301.0 331.5 398.2 20%
Of which                      
e-commerce 154.5 178.3 181.7 153.2 135.1 139.6 140.2 190.1 219.1 261.5 19%
Counterfeit 98.6 144.3 169.8 80.9 47.6 36.1 42.1 43.4 47.8 45.3 -5%
Lost & Stolen 68.5 56.2 54.1 47.9 44.4 50.1 55.2 58.9 59.7 74.1 24%
Card ID Theft 31.9 34.1 47.4 38.1 38.1 22.5 32.2 36.7 29.9 38.2 28%
Card non-receipt 15.4 10.2 10.2 6.9 8.4 11.3 12.8 10.4 10.1 11.7 16%
TOTAL 427.0 535.2 609.9 440.3 365.4 340.9 388.3 450.4 479.0 567.5 18%
UK 309.9 327.6 379.7 317.6 271.5 260.9 286.7 328.4 328.7 379.8 16%
Fraud Abroad 117.1 207.6 230.1 122.7 93.9 80.0 101.6 122.0 150.3 187.7 25%

*All figures in £ millions

 

The Basics to protect yourself from card fraud

  • Never give out your bank card or any sort of account information to someone you don’t know. Commonly, fraudsters will try to contact you via email or a phone call asking for information- secure sites or your bank will never do this.
  • Always keep your card in sight, particularly when paying for something in a crowded area. Stay vigilant and don’t let yourself get distracted when paying for something (easily done when in a group of friends). Double check the amount you are paying (this is always displayed on secure chip and pin machines) and shield your pin when entering. Finally, don’t let somebody take your card to complete a transaction- make sure it is always done in front of you. 
  • Keep a close eye on your account activity. Bank card fraud can happen at any time, even when you still have your card safely at home or in your wallet, so it is important to keep an eye on your account activity. Most banks offer online banking including an app for your phone which are quick and easy to use daily to see what is going in and out of your account. Otherwise, you can check your account balance on most ATM machines or have paper statements sent to your home address every month.  If anything looks suspicious or money is leaving your account that wasn’t you, you should contact your bank immediately. 
  • Sign your bank card as soon as you receive a new one. If you don’t, it is easy for a fraudster to do it themselves if they get a hold of your card and use it to process transactions without your knowledge. You should also dispose of your expired cards by cutting them through the magnetic strip and card number so they are impossible to be read or used.

 

Protecting your PIN (Personal Identification Number)

  • Choose a PIN number that is difficult to guess- birthdays, anniversaries and phone numbers are obvious. Try to pick something at random or just memorise the one your bank has given you.
  • Vary your PIN numbers. If you have multiple cards don’t use the same number for every card- if your wallet or purse is stolen it will be much harder for all of them to be cracked.
  • Never tell anyone your PIN number- even close family, friends, your bank or the police. Remember, there is no need for a legitimate company to ask for your PIN, only a fraudster would.
  • When you have requested and received a new PIN number from your bank, memorise it as quickly as possible and shred the slip. Never write down your PIN number, especially not on the card itself, as this could be found by a fraudster.
  • Always shield your PIN number with your hand when entering it into a chip and PIN machine in a shop or taking cash from an ATM.
  • Don’t let yourself get distracted when using your PIN number to authorise transactions.

 

Shopping Online

Entering your card details into websites online can open you up to wide range of fraud and scams so it is important that you are aware of how to make sure you are using safe and trusted websites.

  • It is important to check that your computer or device has an up-to-date anti-virus software and firewall installed.
  • Secure websites should have an unbroken key or a locked padlock symbol displayed next to the web address in the search bar.
  • You should check that the retailer’s address has changed from ‘http’ to ‘https’ as it shows the connection is secure.
  • Make sure you never enter your PIN number into a website as you would never be asked for this information by one that is trusted.
  • You can sign up to either ‘Verified by Visa’ or ‘Mastercard Secure Code’ which will require you to set up a password with the card company which you will then be asked for before the transaction is completed any time you buy something online.
  • Once the transaction has gone through you should make sure you log out of the website, save and print the order information (reference number, date) and the website’s policies and terms and conditions so you have proof of the order if you needed it.

 

Preventing Fraud When you are on Holiday

woman on holiday being scammed by pick pocket

The easiest way to protect yourself from fraudsters while you are away is to use cash, but understandably not everyone wants to carry a lot of cash around with them on holiday. Your credit or debit card is easy to use on holiday as most are accepted around the world and you can take out cash from ATM machines whilst you are there. So, if this is your preferred choice you should only take one card you want to use and leave the rest at home in a secure place. You should treat it like you would at home by never letting your card leave your sight, protect your PIN and check your bank statements when you get home for anything unusual or suspicious.

However, pre-paid cards are increasing in popularity as you can put a certain amount of money onto the card before you go and then you can spend it however you like when you are there. Also, it is not linked to your bank account so if it was to be lost or stolen you can only ever lose the money that is on the card. The only down side is that you may be charged a fee to withdraw cash from an ATM or if you don’t use the money within a certain time period - but this is a much safer option.

Get more tips on preventing fraud by reading our article about the many holiday scams to whatch out for.

 

What to do if you have been a victim of card fraud

  • Immediately report any lost or stolen cards to your bank or card company. Many companies have zero-liability policies which mean you won’t be held accountable for any fraudulent activity made from your account. You should also report any lost or stolen cheques or cheque books. Banks and card companies have 24-hour emergency number which you can find on their websites or your bank statements.
  • You should also report the theft to the police- especially if it involves a second crime, like your handbag or wallet being stolen. You should do this as soon as possible.
  • If an account has been set up in your name and you do not have a relationship with the card company or bank, you can report this straight to Action Fraud. Their number is 0300 123 2040.
  • Change your PIN numbers and online banking passwords immediately to prevent any further damage.
  • Request a copy of your credit report. Normally, any unusual activity like new accounts set up that you don’t recognise or didn’t authorise will show up on your statements and reports.

 

 

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