Bank card fraud in the United Kingdom fell by 23 percent during the first half of this year; but online banking fraud jumped by 55 percent, according to Banking Times. Phishing attacks increased 26 percent.
The drop in card fraud is attributed to the country's switch to chip-and-PIN cards as well as to other anti-fraud measures implemented by VISA and Mastercard, such as "Verified by Visa" and "Mastercard Secure Code".
The chip-and-PIN security scheme was launched in the UK in 2004 and became mandatory nationwide in early 2006. The system uses a chip embedded in bank cards that verifies the customer’s PIN when he or she enters it on a keypad. The chip holds a secret key that validates the card to the bank. The key is supposed to ensure that fraudsters who know a bank customer’s PIN can’t simply embed the data into any chip-enabled blank card. The system is also supposed to resolve questions about who is liable when funds are withdrawn from accounts, since only someone who possesses both the card and the PIN can theoretically make a withdrawal.
Chip-and-PIN addresses only card-present transactions. But the industry body, Financial Fraud Action UK said that losses on transactions where cards aren't present (such as on the internet or over the phone) dropped 18 percent.
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