‘Card not present’ crime in the UK is far higher than official statistics suggest and is getting worse. 

Figures released by credit card fraud protection specialist, The 3rd Man Group, forecast that over £500 million of fraud will be attempted during 2008, an increase of over 200 per cent in 2007. 

APACS reported that CNP fraud in 2007 was £290.5 million, an increase of 37 per cent on 2006. This was the figure on UK issued cards only and excludes losses on non UK issued cards.

These alarming figures show that the appetite among fraudsters around the world to use the Internet for crime among UK retailers has far from diminished, and comes at a time when retailers need every penny of revenue they can get to cope with the global credit crunch.

Paul Simms, CEO of the 3rd Man Group, says that card not present fraud is a major problem that is not going away and clearly is getting worse as criminals increase their efforts to steal from retailers.

“We aren’t just talking about petty thieves and opportunists here. This money also funds illegal drugs, organised crime and terrorism,” he adds.

Retailers have become a soft target for fraudsters, although the introduction of Chip and PIN dealt a massive blow to criminals.

Changing their focus to ‘card not present’ fraud, where the buyer does not have to be physically present at the point of transaction (such as Internet and Mail Order shopping), fraudsters have evolved their techniques to con retailers out of millions of pounds.

Many retailers are now fighting back by using behavioural data screening techniques, however, and by sharing their data through initiatives such as SuperSearch which scans millions of ‘live’ transactions for retailers each month.

Simms estimates that behavioural analysis detects around 80 per cent of all attempted frauds, but warns that retailers can be stung by exactly the same fraud committed with another retailer.

He adds that they are protecting each other by sharing their data and in doing so will already save over £100 million in 2008.

“But more can be done. We have a real opportunity to get on top of this problem through managed collaboration, involving retailers, consumers and the banks,” Simms says.

Shared databases contain clearly fraudulent and highly suspicious data, including listings of bad or questionable details such as email addresses, delivery addresses, phone numbers, IP addresses and card numbers.

Shared databases are not restricted to retailers as banks can also integrate their systems with services such as SuperSearch.

Simms explains that when fraud is detected a data feed is sent to the respective bank informing them that their cardholder has had details compromised.

“They can then act to re-issue the account number and possibly block the card. In the same way the banking community succeeded with Chip and PIN, this is another major way to protect retailers from card not present fraud,” Simms concludes.

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