Preventing card fraud

Chip and PIN - the combination of two effective security features. The first, the `chip' or microchip on the card stores card data more securely than a magnetic stripe, making chip cards much harder to counterfeit. The second, the four-digit PIN, which is used to prove you are the genuine cardholder. It is a much safer way to prove that you are the genuine cardholder as it cannot be compromise in the way that a signature can.

The Dedicated Cheque and Plastic Crime Unit (DCPCU) was set up in April 2002 as a two-year pilot to focus on the organised criminals behind the huge increases in counterfeit card fraud. The pilot was jointly funded by the banking industry and the Home Office and staffed by police personnel, and fraud investigators and bank staff provided by APACS and its members.

Since the end of the pilot the permanent Unit has been fully sponsored by the banking industry. In addition, it has extended its focus from purely counterfeit fraud to encompass other categories of serious and organised cheque and plastic crime, including cash machine fraud, account take-over/application fraud, mail intercept, cheque and card-not-present fraud.

For more information about DCPCU visit their website at www.dcpcu.org.uk

Payment Industry and Police Joint Intelligence Unit (PIPJIU) distributes information and intelligence between the banking industry, police forces and other law enforcement agencies throughout the UK to combat counterfeit card fraud, particularly skimming. It has contributed to the identification of several major counterfeiting rings run by organised criminals.

The PIPJIU is also developing its role as a leading centre for the exchange of information and intelligence between police and the banks on all types of card fraud including card-not-present, account take-over and mail non-receipt. The PIPJIU works closely with the DCPCU.

Helping retailers fight fraud through tactical programmes to reduce card fraud are a key part of the industry's work with fraud-prone card-accepting businesses. There are used as a core part of the banking industry’s work with retailers.

These programmes help to create a greater awareness amongst shop staff of the card fraud problem and encourage an increase in the number of fraudulent cards captured.

Underlying the programme is Card Watch’s Spot & Stop Card Fraud education pack. Developed in close collaboration with retailers, police and organisations such as Crimestoppers, it provides support to retail staff throughout the UK on how to identify counterfeit and stolen plastic cards.

Spot & Stop is part of a wide, continuous education programme that incorporates a range of free publications, online interactive training and regular newsletters.

Spot & Stop Card-not-present Fraud guide provides comprehensive fraud prevention training for card-not-present merchants.

Methods to reduce card-not-present fraud - a five pronged strategy is in place to counter this type of fraud:

AVS/CSC (Address Verification System / Card Security Code) is available for businesses that accept card-not-present transactions. These systems allow retailers to verify your billing address and to cross-check a special security code that is on your card. These extra data checks verify the additional information supplied by cardholders to enable merchants to decide whether to proceed with the transaction.
Verified by Visa and MasterCard SecureCode are secure payment systems that prevent criminals from using stolen card details for Internet transactions. These are password-protected services that enable financial institutions to confirm your identity for the merchant when you are using a card to pay online. Enabling merchants to confirm your identity in this way puts another barrier between criminals and your information. These systems also have the advantage of being global, so should reduce fraud abroad as well as domestic fraud. For further information see: Verified by Visa and MasterCard SecureCode
Retailers are encouraged to make use of various card-not-present fraud prevention tools, such as intelligent fraud detection software, available from third-party providers.
Promotion of the Card Watch training pack, Spot & Stop Card-not-present fraud, that provides comprehensive fraud prevention training for card-not-present businesses. An e-learning version of this pack is available on this site.
In the longer term chip and PIN cards may help prevent CNP fraud through the development of pocket-sized card-accepting devices that can be used with phones and computers by generating a dynamic password for use solely in the CNP environment (referred to as token-based authentication).

Intelligent fraud detection computer systems are used by banks and building societies, and can track customer accounts for unusual spending patterns that may occur due to fraudulent activity on a lost, stolen or compromised cards. The banking industry continues to increase the effectiveness and sophistication of customer-profiling neural network systems that identify unusual spending patterns or high-risk transactions. If irregular spending is detected your bank or building society will contact you to check if the transactions are genuine and, if not, an immediate block can be put on your card. These systems are not only used for transactions taking place in the UK but internationally as well.

Identity theft prevention – Arising out of work undertaken with the Home Office a website has been launched that to provide consumers and businesses with practical advice on how to protect themselves from being a victim of ID fraud. To view this site go to www.identitytheft.org.uk

The Industry Hot Card File (IHCF) enables retailers to electronically check every card transaction for cards being used fraudulently.

More than 60,000 retailers subscribe to this electronic file that distributes data on lost or stolen cards. When a card is swiped as part of a normal transaction it is automatically checked against the file. If the details given match those of a card on file an alert is given to the retailer.

CIFAS - the UK’s Fraud Prevention Service provides a range of services to enable its member organisations to exchange information and help identify and prevent fraud, including that relating to plastic cards. CIFAS’ main emphasis is on identity, application and first-party fraud. See www.cifas.org.uk

March 2010 New Card & Banking Fraud Figures - click here to see the release

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