The UK has become a hot spot for card and banking fraud. Some £492m was lost from credit and debit cards in the UK alone last year, up by more than 18% on 2014, according to a study by software analytics firm FICO.
Meanwhile, online and phone-banking fraud soared by 64% and 92% respectively in 2015, according to Financial Fraud Action UK, a financial-services industry organisation that aims to tackle fraud. With techniques ranging from “social engineering” scams, such as “phishing” (fake emails asking for personal financial information) and “vishing” (phone calls claiming to be from your bank or card company) to more high-tech attacks, such as infecting computers with malicious software, even well-informed consumers can fall prey to fraudsters.
How to avoid being a fraud victim
Banks are experimenting with all sorts of new security measures to try to tackle this. Last week, Barclays became the first British bank to offer “voice recognition” access to customers using phone banking. HSBC will begin offering a similar service later this year. Other banks are also trialling other forms of biometric analysis, including using the rhythm of your pulse or the patterns of veins in your fingers to identify you.
However, for now the best ways to avoid fraud are more low-tech. Check your bank statements regularly to ensure that you recognise every transaction – even the smallest unfamiliar payment could be a sign that someone has been tampering with your account. Get a credit report from one or more of the credit reference agencies at least once a year to make
sure that no one has applied for credit in your name.
Check that your computer is running up-to-date security software, to ensure that you don’t fall victim to viruses and Trojans that could steal your details when you log into internet banking sites or make online payments. If you use your smartphone or tablet for banking and shopping, lock it with a pass code in case it gets into the wrong hands.
If you’re unsure about the location or site where you’re making a payment, use a credit card rather than a debit card. This will prevent you becoming overdrawn if fraud takes place. In addition, credit-card companies tend to do a good job of spotting unusual transaction patterns and alerting you to potential fraud.
Lastly, be very cautious about emails and phone calls claiming to be from your bank. In particular, be alert to calls that claim your account or card has been compromised and ask you to transfer money to another account to keep it safe, or to send your card back to the bank via a courier who will be arriving shortly. These are increasingly popular scams.
Reporting fraud
If you suspect you’ve fallen victim to fraud, alert your bank immediately. The Payment Services Regulations say you must be refunded immediately if funds were withdrawn on your debit card without permission.
You may still be liable for the losses, but this will only be the case if the bank or building society can prove you were grossly negligent – for example, telling someone else your PIN code or leaving it written somewhere public. If money is stolen on credit the Consumer Credit Act applies. Under this legislation, you could be held liable for the first £50 spent, although many banks and building societies will waive this charge.