MoneyTalks
Fraud alert
By Paul Gosling
Credit and debit card fraud in Northern Ireland doubled last year – contrary to the trend across the UK, where it fell by 16%. Northern Ireland was one of only three UK regions where card fraud rose and no other region saw anything like the increase experienced here. The second worst region was Wales, where fraud rose by a mere 13%.
Exactly why card fraud here should have jumped so spectacularly when it fell almost everywhere else is unclear. The UK Cards Association, which compiled the figures, was unable to explain the increase, but points out that the figures relate to the place where the fraud is regarded as having taken place, rather than necessarily where the fraudster lives. This means that so-called ‘card not present’ fraud, relating to internet, telephone and mail order transactions, is recorded as happening where the bank or store is based.
Mark Bowerman of the UK Cards Association explains: “Card not present fraud may be recorded as where the head office is. With face-to-face crimes, they tend to start off in London and the South East and then spread across the communications networks to where the population centres are. It may not be people in Northern Ireland who are being defrauded. It may just be that is how it is reported to us.”
Indeed, although the figures rose massively in terms of the percentage increase, total fraud in Northern Ireland remains the lowest of any UK region. There was a loss of £1.4m from card fraud here in 2009, up from £700,000 in 2008. But to put that in context, this is way behind other regions: the next lowest region was East Anglia, with £6.1m, while the region suffering the biggest loss was, not surprisingly, the South East (including London), with £168.1m. This clearly reflects the fact that most financial institutions have headquarters in the capital.
Online banking is more vulnerable
Card fraud is falling overall, as a result of the chip and PIN system – which has reduced the ability of criminals to steal cards and then use them. But there is one activity area where there has been a significant increase in fraud – online banking. And as the incidence of online banking fraud has increased, so readers’ letters suggest banks are taking a harder line in expecting customers to protect themselves from fraud. Banks are now more often refusing to compensate customers for losses from fraud, unless people can demonstrate they adopted reasonable measures to protect themselves.
In total, online banking fraud losses in the UK rose last year by 14% to £59.7m. The rise is largely the result of criminals finding more sophisticated ways to defraud people online. Despite ‘phishing’ scams being around for several years, many people are still falling for them.
These come in emails that may seem to be from your bank, asking for bank account details and passwords. A variation pretends to come from lottery organizers, or a fallen dictator in an African country, promising vast rewards to someone, if only they provide their bank account details to receive the money. Instead, of course, their bank account is emptied. A recent Northern Ireland survey found that 73% of people here have received at least one of these emails in the last year. Some 51,161 people in the UK last year fell for such cons.
Watch for Trojans
Some of the latest tricks are more difficult to guard against and demonstrate the need to keep computers updated with virus protection software. One of the most common threats is from what are termed ‘Trojan’ attacks. By opening an unsafe email attachment, or by going onto a rogue website, the user may inadvertently install software that records key strokes. Those records may show the name of a person’s bank, the account number and password, which are forwarded to a criminal gang. Worse still, someone who falls victim to this fraud risks not being recompensed by their bank, on the grounds that they have not protected themselves properly.
But the source of a problem can be closer to home. One recent poll result suggested that 42% of 16 to 18 year olds had used their parents’ credit or debit cards to buy products – including tobacco, alcohol and knives – illegally, often online. Warnings have also been issued about disclosing unnecessary information to social networking websites and people apparently canvassing at the door or on the phone. A simple rule is never disclose information that will assist someone gain access to your online bank account. Similarly, avoid setting passwords based on easily obtained information – such as your address, the date of birth of yourself or a relative, or the name of your child, spouse or parent.
Another risk factor is to use one password for a variety of online facilities. One of the most obvious rules is also one of the most difficult to comply with – never write down PIN numbers or passwords.
With online banking frauds becoming more common, prevention is being taken more seriously by those banks that want to build a strong reputation for internet banking. HSBC recently launched additional online security for its customers to download, protecting them while carrying out transactions. The Co-operative Bank and its Smile subsidiary have gone further, issuing customers with their own card readers for them to enter PIN numbers while conducting transactions online.
These might seem like extraordinary measures. But extreme threats require extreme solutions.
Question of Finance
Q. I bought a laptop, which included a warranty – underwritten by an insurance company – that promised me a replacement after three years. But now that I have applied for this my claim has been rejected because, I am told, I should have made my application online and I am now out of date. I was never told I had to make a claim online. Is there anyone I can complain to?
A. Yes. As the warranty was underwritten by an insurer, this is covered by the Financial Ombudsman Service. If you submit a complaint to FOS – see www.fos.org.uk – it will investigate this and enforce the contract if it finds in your favour.