1. UK Regional
Card Fraud
A CPP white paper
March 2009

2. Contents
1.1 Foreword
1. Industry Facts
1.3 Research methodology
1.4 Key Findings
- Payment fraud is a common problem
- London is the worst city for fraud in the UK
- We rely on our banks to tell us we have been defrauded
- Online fraud is a big problem
- The average sum fraudulently taken is £650
- Banks should be responsible for preventing fraud
1.5 Conclusion
1.6 Avoiding Card Fraud
1.7 Further Information
1.8 About CPP
UK Regional Card Fraud March 2009

3. Introduction 3
1.1 Foreword
Payment fraud continues to rise
across the UK. With the introduction
of Chip and PIN in February 2005,
payment fraud declined by 13%
to just over £439m, the first annual
fall since 2003. Since then payment
fraud has steadily increased and
now stands at £609.9m driven by
transactions without Chip and PIN
protection.
There is Because Chip and PIN has been so effective at reducing fraud at point-of-sale, or retailer
evidence fraud, criminals have focused their activities elsewhere, and in particular, card-not-present
(CNP) fraud, which now accounts for over half (54 per cent) of total losses. CNP fraud
that the commonly involves the theft of genuine card details in the real world that are then used to
make a purchase over the internet, by phone, or by mail order.
recession There is also evidence that the recession is changing the way fraudsters operate which
will be discussed later on in this report.
is changing
the way
fraudsters
operate
UK Regional Card Fraud March 2009

4. 4
1. Industry Facts
Payment fraud continues to increase despite the best efforts of the industry to control it.
- Card fraud losses totalled £609.9m in 2008 up 14 per cent on 2007
- CNP fraud (specifically internet, phone and mail order fraud) accounts for over
There is half of total payment fraud at £328.4m up 13 per cent on 2007
- Fraud abroad committed by criminals using stolen UK card details in countries
no doubt yet to upgrade to Chip and PIN totalled £207.6m up 11% and double since 2006
that card - Online banking fraud losses reported the biggest increase of 132 per cent to
£52.5m, up from £22.6m in 2007. The growth has been driven by the increase in
phishing attacks and by malware that captures people’s online banking information
fraud - Identity Card theft losses are also another area of growth, up 39 per cent to
continues £47.4m. This is due to the increase in account takeover, whereby fraudsters
target people to take over their accounts and cards. The restriction in new credit
due the banking crisis is forcing many fraudsters to target existing
to be a accountholders where there is a guaranteed financial return
Source: APACS – the UK’s payments association 2008
problem There is no doubt that card fraud continues to be a problem and will get worse over the
coming years. We predict that fraud will continue its upwards trajectory driven by
transactions without Chip and PIN protection until a mass market solution is found that
addresses CNP fraud.
There are of course, some industry initiatives that are already making a difference. In
particular the industry must continue to encourage cardholders and more retailers to sign
up to MasterCard SecureCode and Verified by Visa – secure online payment systems that
help prevent online shopping fraud.
In addition, education lies at the heart of the solution. Consumers must be persuaded to
change their behaviour when it comes to looking after their payment details, how they use
their payment cards and how they monitor their financial affairs. Industry initiatives to reduce
card fraud must be accompanied by a responsible consumer behaviour. Although this report
does not attribute blame to the individual, we recognise that in some cases they can be the
weakest link in the protection chain.
Although the Banking Code protects consumers from financial loses as long as they have
not acted without reasonable care, all cardholders are liable for the first £50. Critically,
however, with CNP fraud increasing, it may become harder for consumers to prove they
have not acted without unreasonable care. This will be an area to monitor and it will be
interesting to see if the Banking code changes in any way to accommodate this trend.
UK Regional Card Fraud March 2009

5. 5
1.3 Research Methodology
CPP commissioned research in February 2009 to establish how widespread card fraud is
across the UK. It looked at how many cardholders have ever fallen victim and the different
ways they fell victim to payment fraud. The aim was to quantify the level of card fraud
across the country and the extent to which UK cities have been affected.
A representative sample of 1,679 UK credit and debit card holders aged 18+ were
questioned by Tickbox.net/Opinion Matters.
The report also draws on figures from APACS, the UK’s payment association.
1.4 Key Findings
Payment fraud is a common problem
26 per cent of consumers claim to have been a victim of card fraud in the past. This headline
figure has risen by 5 per cent from 21 per cent in 2007. This peaks at 30% of consumers
aged 55+. Women generally purport to have been defrauded more (30%) than men (24%).
Q: Have you ever been a victim of card fraud? (by age)
UK Regional Card Fraud March 2009

6. 6
London is the worst city for fraud in the UK
London tops the regional table for card fraud with 38 per cent of Londoners claiming to
have been a victim in the past. This is closely followed by Cardiff (34%), Glasgow (31%),
Manchester (29%) and Brighton (27%).
Liverpool (10%), Nottingham (12%) and Belfast (13%) are the cities least affected.
Q: Have you ever been a victim of card fraud? (by city)
London is
the worst
city for fraud
in the UK
UK Regional Card Fraud March 2009

7. 7
We rely on our banks tell us we have been defrauded
42 per cent of victims found out they had been a victim of card fraud once told by their
bank. 40 per cent discovered fraud by reading bank statements and identifying
transactions that they did not recognise.
Interestingly consumers aged 16-24 are most likely to identify fraudulent transactions by
reading their bank statements, whereas consumers aged 55+ are least likely to identify
fraud through their bank statements. One explanation for this may be that 16-24
consumers are more likely to bank online and regularly check their accounts on a daily or
weekly basis as opposed to the older demographic relying on monthly paper statements
delivered by the post.
Those aged 45-54 and 55+ are most likely to be notified of fraud via their bank (50%)
against 16-24 who are least likely (9%)
Q: How did you first find out that you had been a victim of card fraud?
Consumers
aged 16-24
are most
likely to
identify
fraudulent
transactions
by reading
their bank
statements
UK Regional Card Fraud March 2009

8. 8
Online fraud is a big problem
Complementing the APACS payment fraud statistics (see below), 39 per cent of victims
attribute fraud to online, 21 per cent to card cloning from a cash point or Chip and PIN
device and 8 per cent to losing or having their payment cards stolen. Nearly a third of
consumers (27%) have no idea how they were defrauded.
As you might expect 16-24 are most likely (55%) to be defrauded online – this is no doubt
due to their propensity to shop online and use a wide spectrum of online sites including
social networking forums. It is interesting to note that 16-24 are more aware of how they
have been defrauded whereas a third (33%) of older consumer do not understand how
they have been defrauded.
In 2008, online banking fraud losses stood at £52.5m up 132 per cent and fraud from
counterfeit skimmed and cloned fraud was £169.8m up 18 per cent. Fraud from lost and
stolen cards stood at £54.1m down slightly at 4 per cent.
Q: Which one of the following best describes how you became a victim of credit / debit card fraud? (by age)
UK Regional Card Fraud March 2009

9. The average sum fraudulently taken is £650
Over two thirds of card victims had over £500 transacted fraudulently. And one in twenty
reported transactions of over £2,000. There seems to be little connection with age determining
amount defrauded, however, those aged 45-54 were the most likely to be defrauded of
large sums with 8 per cent claiming to have been defrauded for £2,000 or more
70 % of Q: As a victim of credit / debit card fraud, how much money was transacted fraudulently?
consumers
think that
fraud will
get worse as
a result of
the current
recession
It is clear that consumer behaviour is changing for the better, but still has some way to go
to be truly effective despite 70 per cent thinking that fraud will get worse as a result of the
current recession.
34 per cent of consumers claim they will check their bank statements more regularly this
year and nearly a third (29%) more thoroughly. In addition consumers are more likely to be
more careful in using their PIN at ATMs (27%) and when making purchases (23%). The
threat of payment fraud is also influencing a small minority of cardholders (12%) to reduce
the number of payment cards in their possession and 4% of consumers have said they will
stop using cards in favour of cash. This is an interesting development as previously the
industry put the reduction of payments cards down to better money management and
reducing/consolidating personal debt, rather than fear of fraud.
Worryingly a hard core of consumers are still displaying unreasonable care putting themselves
at risk from payment fraud. Over 13 per cent allow their cards to be taken out of sight in a shop
or restaurant putting them at risk from counterfeit (skimmed/cloned) fraud which saw an
18 per cent increase in 2008 to £169.8m (source: APACS) and nearly one in twenty consumers
(5.8%) leave their cards behind a bar to start a tab – inviting payment fraud to take place.
UK Regional Card Fraud March 2009

10. 10
Banks should be responsible for preventing fraud
Continuing the debate about consumer responsibility 47 per cent of consumers think it is
the responsibility of the banks to prevent fraud, compared to 32 per cent who believe it
should be the responsibility of the cardholder. This may go along way to explain why many
consumers are still not taking the necessary basic steps to protect themselves – from
checking statements more frequently to keeping sight of payments cards when paying for
transactions.
It is interesting to note that consumers aged 16-24 are most likely (51%) to accept it is
their responsibility to prevent fraud with those aged 45-54 least likely (26%). Half of consumers
aged 45-54 think it is the responsibility of the banks to prevent fraud. This demographic also
think the police, government and retailers also have an important part to play.
Q: Who should be responsible for preventing card fraud?
UK Regional Card Fraud March 2009

11. 11
1.5 Conclusion
The increase in card fraud shows no sign of abating and as this report shows it is the
largest cities in the UK that show the biggest problem. London, Cardiff, Glasgow,
Manchester and Brighton are the worst affected with over a third of the capital’s
inhabitants claiming to have fallen victim to payment fraud in the past.
It is clear that consumers need to do more to protect their own details as many of us rely
on our banks to inform us that we have been a victim – encouragingly it is the younger
demographic, those aged 16-24, who are most likely to identify fraudulent activity
themselves.
In line with APACS payment fraud statistics reporting a big increase in CNP fraud, online
fraud is perceived to be the biggest problem with nearly 40 per cent of victims saying they
became a victim via the internet. The findings again show a demographic split with the
older demographic (55+) less aware of how they have been a victim of fraud.
The threat of fraud, however, does seem to be influencing consumer behaviour for the
better. Many consumers are checking their bank statements more regularly and
thoroughly and a minority are reducing the number of cards in their possession to mitigate
the opportunity of fraud. There are still many consumers, however, not taking adequate
steps to protect themselves from card cloning and skimming – this is perhaps influenced
by the fact that nearly half of consumers think it is the responsibility of the banks to
prevent fraud. Again, it is an older demographic, in this case consumers aged 45-54, who
are least likely to accept it is their responsibility to prevent fraud with those aged 16-24
most likely to accept responsibility.
This is an interesting trend and perhaps indicative of how consumers now have a different
relationship with the banks today than in the past.
It is clear The next set of APACS payment statistics will be published October 2009, so it will be
interesting to see if payment fraud has increased in the first six months of the year. Many
that commentators believe fraud gets worst in a recession as fraudsters change tactics and
some consumers resort to desperate measures.
consumers
need to do
more to
protect their
own details
UK Regional Card Fraud March 2009

12. 1
1.6 Avoiding Card Fraud
Kerry D’Souza, is a card fraud expert at CPP and offers the following advice to consumers
to help protect themselves from payment card fraudsters. Kerry has over ten years’
experience and is responsible for CPP’s industry-leading Card Protection product that
assists people in the event of lost and stolen payment cards.
Kerry is media-trained across print and broadcast and is available for media interviews on
the issue of payment fraud.
Top tips
- Never let your payment cards out of sight in a shop or restaurant, as they risk
getting copied or cloned
- Only carry the cards you need incase you have your wallet/purse stolen. And
never carry payments cards loose in a bag or pocket
- Never write down your PIN, bank account details or password
- Make sure your post is secure. If you are waiting on new credit or debit cards,
know when to expect them
- When you enter your PIN in a shop or a cash machine, cover the number from
prying eyes or hidden cameras. Look out for skimming machines which can be
placed over the card slot and contact the police if you see anything suspicious
- Sign up to Verified by Visa or MasterCard SecureCode to prevent online fraud
- Never respond to unsolicited e-mails or phone calls asking for personal
information – your bank will never ask you to confirm your passwords or
account details
- If you cards are lost or stolen, cancel them immediately or sign up to a Card
Protection service that will cancel and reorder all your cards with just one
phone call from anywhere in the world
- Regularly check your bank statements to keep an eye on undetected fraud
- If you shop online make sure you have installed anti-virus software,
anti-phishing tools and an active firewall. Never use an insecure website
1.7 For further information please contact:
Nick Jones
PR and Communications Manager
CPP Group Plc
Holgate Park
York YO26 4GA
Tel 0104 544 387
E-Mail nick.jones@cpp.co.uk
Web www.cppgroup.com
UK Regional Card Fraud March 2009

13. 13
CPP is an award 1.8 About CPP
winning organisation:
The CPP Group Plc (CPP) is an international marketing services business offering bespoke
- Named in the
customer management solutions to multi-sector business partners designed to enhance
Sunday Times 008
PricewaterhouseCoopers
their customer revenue, engagement and loyalty, whilst at the same time reducing cost to
Profit Track 100 deliver improved profitability.
- Finalists in the National This is underpinned by the delivery of a portfolio of complementary Life Assistance
Business Awards, 3i Growth products, designed to help our mutual customers cope with the anxieties associated with
Strategy category, 008 the challenges and opportunities of everyday life.
- Finalist in the National Whether our customers have lost their wallets, been a victim of identity fraud or looking
Business Awards, Business for lifestyle perks, CPP can help remove the hassle from their lives leaving them free to
of the Year category, 007
enjoy life. Globally, our Life Assistance products and services are designed to simplify the
and Highly Commended
in 008
complexities of everyday living whether these affect personal finances, home, travel,
personal data or future plans. When it really matters, Life Assistance enables people to live
- Named in the Sunday Times life and worry less.
006, 007 and 008 HSBC
Top Track 50 companies Established in 1980, CPP has 11 million customers and more than 200 business partners
across Europe, North America and Asia Pacific and employs 2,000 employees who handle
- Regional winner of the
National Training Awards,
16 million consumer sales and service conversations each year.
007 In 2008, Group revenue was £259.5 million, an increase of more than 15 per cent over the
- Winner of the BITC Health, previous year. This is more than five times the sales level of 2000.
Work and Well-Being
Award, 007 What We Do:
- Highly Commended in the CPP provides a range of assistance products and services that allow our business partners
UK National Customer to forge closer relationships with their customers.
Service Awards, 006
We have a solution for many eventualities, including:
- Winner of the Tamworth
Community Involvement - Insuring our customers’ mobile phones
Award, 006. Finalist in
- Protecting the payment cards in our customers’ wallets and purses, should
008
these be lost or stolen
- Highly Commended in The
Press Best Link Between - Providing assistance and protection if a customer’s keys are lost or stolen
Business and Education, 005
- Providing advice, insurance and assistance to protect customers against the
and 006. Winner in 007
insidious crime of identity fraud
- Award Finalist in the
National Business Awards, - Offering advice to people considering legal action and cover for the costs
Innovation category, 005 involved in taking action on a range of legal issues
- Award finalist for the 003 - Providing discounts on everyday lifestyle commodities
The Royal Bank of Scotland
Sunday Times Business - Monitoring the credit status of our customers
Awards
- Recognised as one of the
Growth Plus Europe 500 For more information on CPP visit:
www.cppgroup.com
companies
UK Regional Card Fraud March 2009