The fraudulent use of credit and other plastic payment cards is a costly business. This type of crime totalled £424m in 2002, according to the banking trade body the Association of Payment Clearing Services. But now a pilot scheme is underway to try to stamp out such scams. The signing of credit card slips is set to become a thing of the past on Teesside as new hi-tech crime-busting measures are put into place. It has been dubbed by some as "the biggest shift in the way we shop since decimalisation." But some local business bosses are not convinced that the crime-combating measures go far enough. Tactics with our plastic Signing credit and debit card slips is becoming old hat as a trial gets underway of new chip and PIN cards. These are currently being tried out in Northampton but will be in use nationwide by 2005. Instead of writing their name on a paper receipt, customers tap a four digit Personal Identification Number (PIN) into a keypad. Some say businesses will process transactions more quickly and everyone will benefit from shorter queues. But the Federation of Small Businesses is concerned that many small firms are still in the dark about the plans. It warns that by the start of 2005, businesses that do not have the new point-of-sale terminals will become liable in the event of fraud. John Wright, North East FSB policy chairman, said: "Businesses that rent their terminals from a bank should be okay but others could face substantial costs upgrading to the new system." Mr Wright, who is also chief executive of Cleveland Accredited Training Centre in Middlesbrough, said: "In many cases they know nothing about these plans. "We are calling on the banks to do more to promote chip and PIN in the coming months." Mr Wright is also concerned that while chip and PIN will help combat the use of stolen and counterfeit cards, it will not tackle "cardholder not present" fraud, where the sale takes place over the Internet or telephone. He said: "Cardholder not present crime is a big growth area for fraudsters and shot up by 15pc last year. "There is a real danger that as chip and PIN takes off, fraudsters will just use the Internet and telephone instead. "Chip and PIN cards are a great leap forward but the banks need to do much more to combat cardholder not present fraud." The FSB represents the self employed and small business owners and has 180,000 members. Plastic facts * Credit cards were first issued in the UK in 1966 and debit cards in 1987 * There are 147m plastic cards in use in the UK, comprising debit cards, credit cards, stand-a-lone cash machine cards, charge cards and cheque guarantee cards * The total number of transactions on all types of card exceeded 7.1bn in 2002 * The total value of all transactions reached £376bn * 89pc of adults hold one or more pieces of plastic * Half of all adults use a debit card compared to one third five years ago * More than 115m credit and debit cards are in circulation * The average purchase on a UK-issued credit card in this country is £56 * £5.91 is spend every second on debit and credit cards * More than 40pc of debit card payments are made at supermarkets Fraud: The facts * In 2002, £424.6m was lost to card fraud. This was split up into: Counterfeit: £148.5m Card not present: £110.1m Lost and stolen: £108.3m Mail non-receipt: £37.1m Identity theft: - £20.6m * More than £1.16m worth of fraud occurs on UK plastic cards every day * In 1993, card fraud losses amounted to £129.8m * Today a fraudulent transaction takes place every eight seconds * 34pc of fraud occurs overseas * One out of 400 transactions is fraudulent * The average loss per fraudulent use is £448 (Facts and figures from APACS and Barclaycard) The survey Research shows people are in favour of changes to the way plastic card transactions are handled. A survey suggests attitudes to the old method of payment have altered with 78pc stating it would be very or fairly easy to forge a person's signature. Only 16pc of the 1,332 respondents, more than 200 of whom were victims of credit card fraud, believed it would be difficult. In contrast, 70pc said the new system of using the four-digit codes would be more secure. Chip and PIN spokeswoman Sandra Quinn said: "This is great news. The UK's shoppers are showing that they're more than ready to ditch signing and switch to using a PIN. "They obviously think it's going to be a much better system. And that's very bad news for the criminals out there who have really targeted people's cards over the last few years." The survey - carried out online by Tickbox.net during May - found that more than half said they would prefer using a PIN. Some 27pc said they did not mind either method while more than 73pc said chip and PIN was a good idea. Only 9pc disagreed. Statistics show that 181,500 people in and around the Northampton area have so far been issued with the new-style credit card and 30,000 transactions have been made since last month. Retailers involved in the scheme include Marks & Spencer, ASDA, Safeway, Tie Rack, Vodafone and Scottish & Newcastle Retail pubs. The scheme will eventually see more than 40 million UK consumers using the system by 2005. By that date almost all credit and debit card transactions will be verified using the PIN code system, which will cost up to £1.1bn to set up. It will see more than 850,000 PIN terminals installed, 122 million new cards issued and 40,000 cash machines upgraded. They're partners against crime Retailers in the North-east have joined forces to set up the North East Retail Crime Partnership. The partnership comprises traders, the Northumbria Coalition Against Crime, the Police and others involved in crime prevention and community safety. It aims to prevent "prolific, persistent, professional" shop thieves and promote a safer shopping environment. Anne Tate, NERCP chief executive, said: "We gather and disseminate intelligence about shop thieves who steal goods, commit cheque and credit card fraud or who operate refund fraud." NERCP advises people to shred or burn receipts with card numbers on to prevent someone obtaining their details and using them. * Contact NERCP at Block 33, Northumbria Police HQ, Ponteland NE20 0BL, call 01661 868424 or email: Info@NERCP.org.uk Credit card fraud Credit card fraud accounted for losses of £424m in 2002, of which £110m was the result of "cardholder not present" swindles. According to the experts, much of the money obtained from card fraud is used to fund other crime such as drug trafficking, illegal immigration and terrorism. Other crimes like burglaries, muggings and car break-ins are often motivated by the opportunity to steal payment cards. The Chip and PIN programme is a scheme backed by the UK's banks, card companies, building societies and retailers and co-ordinated by the British Retail Consortium and the Association for Payment Clearing Services. Chip and PIN technology is already in use in many parts of the world, including France, Australia and New Zealand. The new cards have a microchip which holds the card data so securely it makes it much more difficult for criminals to clone cards. This May saw the first step towards a national rollout of this system in the UK. It involved re-issuing a significant number of Northampton cardholders with new chip and PIN cards and upgrading point-of-sale terminals at a selection of retail outlets. Northampton was chosen because it is representative of the demographics of the UK. It has a high proportion of people who live and shop in the same area, is of a sufficient scale for a meaningful trial and has a good representation of leading high street retailers. A host of credit card companies are participating in the trial. "Consumers are taking to the new system well," said David Smith of the BRC. "We are particularly pleased how customers of all ages seem to enjoy the simple new system and its fraud-busting benefits. "However, we are not complacent and we are taking time to understand particular concerns that people have such as privacy issues and the difficulty some people have in remembering their PIN numbers." Jemma Smith, of APACS, said: "The trial is going well and we are learning valuable lessons. "While there have been no significant hiccups, we are seeing how consumers are responding and how different equipment is working in different retail environments. "The banks, retailers, and equipment manufacturers are all learning from Northampton to refine plans for the national rollout." Consultations are taking place with disability groups and groups representing the elderly around the UK to ensure development and testing incorporates the needs of disabled customers The trial, which began in May lasts until the end of this month Its results will then be used to fine-tune the introduction of the new look system across the country. Teesside will be part of the new process within the next 18 months. More information is available at www.chipandpin.co.uk which has provided the pictures of the new terminals in use. The victim I have followed the implementation of the Northampton pilot scheme and any reaction to it very closely. As well as an interest from a work point of view as a business journalist, I also have a personal interest. For I was a victim of credit card fraud recently. I was alerted when I received a letter from my credit card company's fraud department. This told me it maintained a monitoring system that highlighted unusual activity on cardholders' accounts and I was requested to contact them urgently. When I rang I found to my horror someone had tried to buy £1,500 of domestic goods on it. Luckily it had been picked up by the company's security procedures and the cost did not get as far as my credit card statement. Obviously I was keen to find out what had happened, particularly as my card had neither been lost nor stolen. According to the person I spoke to, fraudsters are now using sophisticated computer systems that can come up with likely combinations of existing card numbers. But what they could not explain to my satisfaction was exactly how this scam could succeed. To my mind there must be holes in the con merchants' information such as card expiry date and other personal details that are often required when you buy, particularly over the phone or Internet. But perhaps while they are thwarted in many instances - as in my case - it is still worth their while due to some companies not being vigilant and not having robust enough security systems in place. So I welcome the Chip and PIN scheme but at the same time I agree with John Wright this will not combat what is referred to as "customer not present" transactions. And not only that but I can see queues building up at tills if a person forgets the all important four numbers that make up their PIN. This inevitably will happen particularly as the experts advise for safety's sake you should not choose the same PIN number for all your credit cards, debit cards, and online bank accounts. What do you think? Have you fallen victim to credit card fraud? What do you think about the crime-busting measures? Write to the Editor, Evening Gazette, Borough Road, Middlesbrough, TS1 3AZ, fax 01642 247168 or e-mail editor@eveninggazette.co.uk | 
Business Comment
Enterprise North East
Evening Gazette's
