Online fraud up, but rate of growth slows

Online authentication systems are helping to cut losses from card not present fraud

Online fraud continued to rise last year, driven by the continued uptake of chip and Pin technology on the high street, and the increasing popularity of the channel with consumers, according to the latest annual fraud figures from UK payments association Apacs.

Card not present (CNP) fraud, which represents roughly half of all online fraud, grew by 13 per cent year on year to reach £328.4m in 2008, or 54 per cent of all card fraud losses.

However, the rate slowed by 33 per cent from the previous year, thanks in part to the increasing take-up of the MasterCard SecureCode and Verified by Visa online authentication systems, according to Jemma Smith, head of public relations at Apacs.

The increase in CNP fraud also has to be seen alongside the growth in online shopping, Smith explained.

Online banking fraud losses, meanwhile, grew a huge 132 per cent from 2007 to reach a value of £52.5m, driven by a spike in phishing attacks and malware designed to steal log-in information.

"The big increase has been in phishing scams," said Smith. "So many people out there are, unbelievably, not doing what they can to protect themselves."

Interestingly, Apacs did not see any significant impact on online banking fraud after the introduction of the Faster Payments Scheme last year, as rates in the first and second halves of the year were very similar.

Some had speculated prior to its introduction that reducing the payment processing period would leave banks with less time to investigate possibly fraudulent transactions.