Internet fraud on the rise

Internet fraud is rocketing as more people use credit cards online, with figures hitting the £400m mark already this year.

Research from the Association for Payment Clearing Services (APACS) and the Interactive Advertising Bureau (IAB) revealed that credit card fraud has risen more than 36 per cent since last year, and this increase is largely due to the internet.

More specifically, internet fraud has risen 60 per cent since last year, rocketing up from £5m to £8m. By comparison, internet shopping rose 76 per cent in the same period.

The report warned that the most common method of defrauding users was through copycat sites which look like legitimate ebusinesses and are hosted on a deceptively similar website.

These typically play on a user's ignorance of the true web address and capture credit card info entered when the user tries to 'buy' goods.

According to the research, card holders still end up paying in the end as reimbursement costs are generally passed on.

In a separate report, fraud detection firm Sotas predicted that the arrival of 3G mobile systems will further open the floodgates to fraud.

The report warned that the complexity and price of the new technologies, combined with the larger number of companies involved in service delivery, could end up costing operators billions.

Sotas said that more billing relationships between companies would mean more potential for revenue leakage, typically engineered by organised crime gangs. According to the report, this can cost the industry as much as £18bn a year.

The company said that the launch of 3G services next year, by companies including BT, Vodafone, One 2One, Orange and Hutchinson, could kickstart a whole new area of fraud as credit card payment moves to mobiles and mcommerce takes off.