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About Chip & PIN

• Overview |
• Liability |
• Fraud |
• APACS |
• Chip & PIN in Hospitality |

Fraud

Plastic Card Fraud Facts | What is Card-Not-Present (CNP) fraud?

Plastic Card Fraud Facts - before the introduction of Chip and PIN

• £504.8 million of card fraud took place on UK-issued cards in 2004
• Almost £1.4 million worth of card fraud occurs on UK-issued plastic cards every day
• A fraudulent transaction takes place every seven seconds
• Just over 53 per cent of all fraudulent card use in the UK takes place at the retail point-of-sale
• In 2004 the average loss per fraudulent case was £696
• In 2004 the average value of a fraudulent transaction was £117
• If Chip & PIN had not been put into place, forecasts estimated that UK card fraud losses would have been in the region of £800 million by the end of 2005 and £1 billion per year by the end of the decade

What is Card-Not-Present (CNP) fraud?

In 2004, CNP fraud totaled £150.8m. This crime most commonly involves the theft of genuine card details that are then used to make a purchase through a remote channel such as the phone, Internet, mail order or fax. The legitimate cardholder may not be aware of this fraud until they check their statement.

Cardholders should keep cards safe and in sight at all times and discard receipts carefully – shred or rip them up first – and always check statements for unfamiliar transactions.

CNP fraud is perpetrated through the theft of card details for use in non face-to-face transactions and is now the largest type of card fraud in the UK. The problem in countering this type of fraud lies in the fact that neither the card nor the cardholder is present at a till point in a shop. This means that:

• CNP businesses are unable to check the physical security features of the card to determine if it is genuine
• Without a signature or a PIN it is not easy to confirm that the customer is the genuine cardholder
• Card issuers cannot guarantee that the information provided in a card-not-present environment has been given by the genuine cardholder

A number of initiatives are available to help CNP businesses protect themselves from card-not-present fraud.

The card schemes are now finally working with the GDS suppliers to help them implement fraud screening and fraud preventative measures for the customer not present environment. This is particularly important bearing in mind the increase in "pre-payment" in recent years. But we need to remember that in Hospitality, apart from 3^rd party payments, the cardholder will always be present at some time during the transaction.