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Online banking scam fell by more than a third in the first six months of this year, according to a leading payments industry body. This is particularly significant since it’s the first time there’s been a fall in the online fraud figure since 2007.

The UK Cards Association, which represents UK credit and debit card issuers, said that online fraud fell by 36% in the first half of 2010 to £24.9m, compared to the same time last year.

It’s thought increased customer awareness of the need to protect computers with anti-virus software and banks’ use of fraud detection software are behind this fall. But the association warns that although there has been an overall fall in this six month period, scam losses over the last five years have been volatile, so this may not be the start of a confirmed trend.

Fraud losses on UK cards

At the same time total fraud losses on UK cards fell by 20% to £186.8m, the lowest half-year total for ten years. The use of MasterCard SecureCode and Verified by Visa are among the measures credited for this success, along with work with the retail community to raise awareness of how chip and PIN equipment can be protected.

Cheque fraud losses were also on their way down, falling by 13% to £13.5m in the first half of the year. Phone banking losses were the only area to show a rise. They came to £5.8m in total between January and June 2010. Cold calling and fake emails were mostly used to trick customers into revealing security information. The banking industry says its members will never cold call or email customers to ask for login details or passwords.

Melanie Johnson, chair of the UK Cards Association, said: “These figures are testament to the importance that the UK’s card companies place on driving down card fraud losses and reducing any inconvenience to customers. We are determined to make sure that customers feel as safe and secure as possible when they use their cards. To that end the banking industry is committed to detecting and preventing card fraud in all its guises.”

David Cooper, chairman of fraud prevention group the Fraud Control Steering Group, said: “The fight against fraud can only be effective with a joined-up approach, so we continue to collaborate with business, consumers, the police and the government whenever and wherever possible.”

Card and banking fraud currently accounts for less than 2% of the £30bn lost to fraud in the UK every year. In addition, UK consumers are protected from payment fraud on their debit or credit card so that they should not suffer financial loss.

Our view: This news will be welcome to retailers – for while, as the UK Cards Association points out, consumers are protected from payment card fraud, it’s often the retailers who end up paying. There’ve been complaints about the sometimes unwieldy nature of internet fraud prevention devices, from 3D Secure onwards, but it will be reassuring to see that these do have a beneficial effect.

But for multichannel retailers, attention will already be on phone fraud, arguably the area now most vulnerable to fraud since all that most retailers require are the details shown on your credit or debit card.

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