30 January 2012

UK CARDS ASSOCIATION 2012 REPORT - WHAT YOU NEED TO KNOW...

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The UK Cards Association has just published its always eagerly awaited and oft quoted annual report for 2012 (http://www.buzzwordcreative.co.uk/UK-Cards-Annual-Report-2012/html/index.html#/1/) and I am pleased to see that the fraud trend is still on the decline, despite the staggering numbers:
  • At the end of 2010 there were 84.6 million debit cards; 55.6 million credit cards, 6.6 million charge cards and up to an estimated 3.0 million prepaid cards in issue in the UK.
  • Payment cards have become an integral and indispensable part of the UK economy accounting for over 8 billion purchases worth £428 billion in 2010, and accepted at almost 1 million retail outlets in the UK alone.
  • During 2010, 37 million adults shopped over the internet with plastic cards accounting for over 80% of spending, 717 million card payments and £54 billion worth of goods and services.
Melanie Johnson, Chair of the UK Cards Association, stated that fraud prevention is one of the core areas for UKCA, and reported that total industry fraud losses on UK cards has continued to decline from their peak of £610 million in 2008 to £365 million in 2010, the lowest annual total for a decade, with the first half of 2011 showing a further 9% decline compared to the same period the previous year. (obviously, full year figures for 2011 are not available yet, so make sure you check www.theukcardsassociation.org.uk for updates). Ms Johnson’s puts this down to the banking industry’s continued investment in fraud prevention initiatives (e.g. DCPPU, FISS) but also its commitment to increase consumer awareness.
The efforts the UKCA are undeniably worthy of note:
  • Promoting the wider rollout and use of online fraud prevention solutions such as Verified by Visa, MasterCard SecureCode, cardholder address verification (AVS) and card security codes (CSC);
  • Encouraging merchants to make use of card-not-present fraud prevention tools (more on this in a later blog)
  • Deploying a multi-pronged education and awareness strategy through the media and other campaigns to targeted groups (e.g. support of the BeCardSmart campaign, consumer research, working with the Identity Fraud Communications & Awareness Group on ID Theft, etc.)
And the results prove it: card-not present fraud shows the 2nd biggest decline at 16% since 2009 (£266.4M to £226.9M). The biggest decline was for counterfeit cards at 41% (from £80.9M to £47.6M) and whilst the report doesn’t go into the reasons for this decline, I suspect it is probably due to further deployment of Chip & PIN cards and more issuing of Dynamic Data Authentication (DDA) and Combined Data Authentication(CDA) cards.
Whilst all of this is very good news indeed, the UKCA reports that fraudsters have reverted to more basic means of fraud using distraction techniques and social engineering methods to get hold of personal information (see recent article from FICO and Equifax). For those who have read my earlier blog, you will have seen that the Verizon DBIR 2011 also states that very few of the breaches studied required sophisticated methods of attack. So again, it’s back to basics, and education is key...
Until next time...