Nobody can deny that the Chip and PIN initiative has been worth it. According to the APACS, the UK payments association, UK card fraud losses fell by £65 million in 2005 to £439.4 million. Counterfeit fraud - where cards are either skimmed or cloned - fell by 25% to £96.8 million as the chip embedded in new cards offers a higher level of protection. Fraud on a card stolen before the genuine cardholder receives it (which is known as 'mail non-receipt') enjoyed an even sharper reduction in 2005, down by 45% to £40 million, as it has become more difficult for fraudsters to use stolen cards without the PIN.
These changes are long overdue. The UK had been reluctant to adopt Chip and PIN and had acquired the dubious title of 'Fraud Capital of the World'.
However, we can't afford to be complacent. Petrol giant Shell recently suspended Chip and PIN at 600 UK petrol stations after more than £1 million was siphoned from customers' cards. Criminals posing as technicians are thought to have hidden devices to capture PINs inside terminals. The information has then been used to create cloned cards which were used to withdraw the cash.
CNP fraud
Given how long Chip and PIN has been established in Europe, the fraudsters have had plenty of time to investigate alternative options. For example, while the headline figures from APACS are impressive, 'card-not-present' (CNP) fraud (where goods are purchased online, over the phone and by mail order) actually rose by £32.4 million - a rise of 21%.
CNP fraud is a difficult area to manage, as credit cards were never designed to be used in the way that they are being used today, with neither card nor the cardholder present.
So, despite the introduction of Chip and PIN, there are still many other sophisticated ways of getting hold of your credit card details currently being employed by the criminal fraternity. Likewise, there are also plenty of unsophisticated ways for fraudsters to obtain sufficient personal details to obtain credit in your name - for example, by stealing important documents like your passport or driving licence and rifling through your bins.
Online security
The next significant step in further protecting these non-face-to-face transactions will be to use Chip and PIN security for online transactions. This could, for example, involve customers using a Chip and PIN card inserted into a small handheld reader and tapping in their PIN to generate a one-off number to verify each transaction.
Meanwhile, customers must remain vigilant by ensuring that they keep all their account information secret, so that it does not fall into the wrong hands, and to alert their bank immediately if they suspect fraud. It's also worth ensuring your PC is protected with a firewall and antiviral software if you're shopping online.
ATM fraud
By the end of 2005, cash-machine fraud was also down by 12% to £65.8 million. However, the experts agree it's still a substantial problem throughout Europe. Not only are the fraudsters' techniques improving, but there are still many ATMs out there that can't recognise chips and so still rely on the magnetic strip on the back of your card.
The fraudster attaches a card reader to the outside of the slot into which you put your card - these devices can be hard to spot as they look like part of the machine. This is a robbery that you never realise has taken place. The details can lead to a new, fraudulent card with a fresh signature being made, which can then be maxed out to its limit. Many fraudsters will now be out to get your PIN too, and they don't need to be standing looking over your shoulder to do this; they can rely instead on a pin-hole camera that records the PIN you enter on the keyboard.
Pin-hole cameras have a lens as small as a full stop. If one of these is installed into a cash machine, it's unlikely you'll see it, but you may be able to see the card reader. So, when approaching a machine that has other ones beside it, check if all the machines look the same. This works best if you go to the bank that your account is with to withdraw cash, as all the machines for that bank should look the same. Look for any wires or cords coming out of the machine slot.
Card readers
One type of card reader is a flat, flexible piece of plastic that the fraudster will slot into the machine, coming back to pull it out and plug it into a computer. The more common type is an external reader. The slot on the face of a machine that has one of these attached to it will be raised and possibly a different colour to the rest of the parts of the machine. The external reader is glued on to the front of the slot and copies your card as it passes through. Most banks machines have smooth-fronted card slots, not raised, so this is a good indicator to look out for.
Also, be particularly wary if adjoining cash points have 'out-of-order' signs on them, as this can be a ploy to divert customers to the machine that has been tampered with. This also goes for the out-of-order sign on the screen, as a criminal will break a machine that they cannot get a camera or card copier into to get you to use one that they have been able to crack into. To get round pin-hole cameras it's also worth shielding the keyboard with your spare hand as you enter your PIN.
ATMs inside bank branches are very often a safer bet, but one of the safest ways to withdraw cash from your account is to get cashback at the supermarket. Many supermarkets are open 24 hours a day, and the best bit is that the card never leaves your sight. But take note of what's happening around you, never share your account details with anyone and never let your card out of your sight.
What to do if you suspect you are a victim of card fraud
It's vital to call your card issuer immediately - all banks will have 24-hour emergency phone lines for this purpose - and explain what's happened. Also inform the police as this could speed up refunds for any unauthorised use. If someone else makes a purchase with your card before you inform your bank, the most you will be liable to pay is £50. However, according to Cardwatch.org.uk, most banks and building societies will overlook this and refund the total amount. Do remember, however, that if you have acted negligently - for example, you've stored details of your PIN in the wallet holding your card - your bank may not refund the money.
How to use your card safely and securely
1. Sign any new cards as soon as you receive them.
2. Use different PINs for different cards.
3. Memorise your PINs and do not write them down.
4. Never give anyone else your PIN details or any other account information.
5. Remember that your bank will NEVER request details of your PIN or whole passwords.
6. Destroy copies of any receipts that detail your card details.
7. Regularly check your cards to ensure none have gone missing
