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UK credit card fraud report 2008
25/07/08
The most
comprehensive picture of card fraud in the UK is revealed today as
experts in the fight against credit card crime reveal the true
extent and nature of the problem facing innocent consumers and
retailers. New research published by The 3rd Man and 192business.com
identifies where the major fraud hotspots are throughout the UK and
reveals exactly how card criminals ply their trade.
Figures released in April this year already show that ‘card not
present’ crime is far higher than official figures suggest.
Supporting a BBC investigation, the 3rd Man demonstrated that
fraudulent credit card activity in the UK is over half a billion
pounds, more than official statistics show.
Furthermore, users of 192business.com’s customer ID check service
have revealed that for every fraud that is reported, a further 8
attempted frauds go unreported and ignored by both law enforcement
and the banks.
However, with fraudsters finding ever more sophisticated and cunning
ways to steal our personal details, this latest research by the 3rd
Man and 192business.com show exactly where and how such fraud is
perpetrated.
“Investigations like these continue to show that card crime is a
major and growing threat to consumers and retailers,” says Andrew
Goodwill, fraud expert and Director for the 3rd Man Group. “By
pooling and sharing online retailers’ transaction data and their
fraud experiences, we can see exactly how that trend is changing and
continuing to grow. Fraudsters simply don’t give up.”
Fraudsters – they exist, but where do they ply their evil trade?
The 3rd Man’s analysis of card fraud hotspots reveals the following
places to be the most densely populated areas of criminal activity
on the Internet. London tops the league of fraudulent card
transactions with South East London, and particularly Thamesmead
(SE28), gaining notoriety as the place with the most fraudulent
activity in the UK.
Based on an analysis of over 30 million ‘good’ and ‘bad’ card
transactions over the past six months (January to June 2008), the
findings focus on fraudulent activity by postcode. In the South East
of London, for example, postcodes SE28, SE18, SE15, SE6 and SE17
house the worst offenders.
Outside of the capital, other hotspots in the top ten places include
Manchester (5th) Romford (3rd) and Ilford (8th) in Essex, and
Dartford (10th) in Kent. In the Midlands, Coventry (7th) is followed
by Nottingham (9th).
Beyond the top ten places, Wales and Northern Ireland are the least
fraudulent places in the UK with only Cardiff and Belfast recording
notable levels of card fraud activity. In the South West of England,
Exeter has the most fraudulent activity whilst in the North East
Newcastle has the highest score. In Scotland, Aberdeen and Glasgow
have relatively high incidents of fraud compared to other parts of
the country.
Compared to the last analysis of postcode fraud carried out by Early
Warning (which has since been acquired by the 3rd Man Group), places
such as Liverpool and Kilmarnock have succeeded in reducing their
levels of card fraud. “This is because local policing activity has
targeted these criminals and it’s having a clear effect,” says
Goodwill.
How do the fraudsters do it?
As providers of customer ID check solutions to help retailers
prevent fraud, 192business.com has produced some research into the
modus operandi of the fraudster. Based on interviews with convicted
and unconvicted fraudsters, this research provides a useful insight
into the who, the what, the when, the where and the why of card
fraud.
The research can be downloaded at
www.192business.com/mo
and some of the more interesting findings are as follows:
Fraudsters use a variety of methods to steal an identity when they
commit fraud: “They work in bars where the pay’s rubbish and they
get treated like idiots by the boss and the customers so its like
Christmas for them when I come along and offer them a way to make
shed loads of cash without any risk” George, Fraudster #B14,
unconvicted
“Chat rooms give me a way to spot potential victims. It takes a
while to build up trust but that’s ok, its worth the effort in the
end. As time goes on, people give out more and more stuff…I mean, to
start with, I can be a man or a woman online. I use gender-free
usernames like ‘Filmlover34’ so I can be whoever I need to be.”
Michael, Fraudster #E5, unconvicted
Fraudsters probe for the point of least defence and test to see
which sites will let them get away with card fraud
“You don’t always get lucky first, second or third time. As long as
there’s a good supply of card details and rubbish websites, sooner
or later you’re going to get a result. That makes the waiting more
than worth it.” Gavin, Fraudster #B17, convicted
“I carded $800 per order, but I try a first order of $100 or $150”
Gavin, Fraudster #B17, convicted
Some fraudsters are brazen enough to use their own address to take
delivery of goods whilst other fraudsters take more care….
“I never stayed more than six months. Long enough to use and abuse
the address and the credit of whoever lived there before me.”
John, Fraudster #D8, convicted
“I park outside the house next door and either tinker with the
engine or give it a wash. When the van turns up and the courier
knocks at the door, I shout over “they’re out mate” and tell him
that they work all day then I offer to take the parcel. It’s never
failed yet. It means quite a bit of waiting round sometimes plus you
have to move about a bit so that the couriers don’t recognise you
but that’s a small price to pay.”
Jonathan, Fraudster #C5
Fraudsters run fraud on a commercial scale and resell the goods on
the black market
“The woman where I get the cards sells stuff on for me too but she
takes a pretty big cut so I tend to use the others if I can.” Ben,
Fraudster #C16, unconvicted
“People tell me what they want and I get it kiting the card. I
charge between half and a third of the cost price.” Mary, Fraudster
#D1, unconvicted
Director of 192business.com, David Pope, adds: “We did this study to
help the fraud managers using our customer ID check solutions to
better understand how fraudsters work so they can prevent fraudsters
from coming to their site. We work with ecommerce sites like
Panasonic, Halfords and 24/7 Electrical to help them allow valid
customers to transact whilst at the same time spotting card
fraudsters and preventing card fraud. Fraudsters share information
and work together so the fraud prevention industry should be doing
the same. Online retailers can get involved and share our
intelligence by going to
www.192business.com/mo”
“The next major step forward is to ensure that people are found out
and prosecuted. The fact is that card fraud, despite its enormous
costs to business and the economy, is not taken as seriously as it
should be. By exposing where fraudsters congregate and how exactly
they deceive and steal, the police and other law enforcement
authorities should be able to deal with the problem more
effectively,” says Goodwill.
“We fully support the recent call by the House of Lords Science and
Technology Committee for a change in the way card crime is reported.
If you’ve been the victim of a card crime you should report it to
the police as well informing your bank. It simply isn’t in the
bank’s interest to report criminal activity to the police.”
“Until Government devotes more resource for each and every police
force to tackle card fraud and gives each and every police force
targets for card fraud arrests and prosecutions, then fraudsters
will see card fraud as easy pickings. In fact, several (ex)
fraudsters that I’ve met still perceive little risk in committing
card fraud,” adds Pope.
“We shouldn’t lose sight of the fact that online and mail order
shopping is a huge success and will continue to be so,” says Paul
Simms, CEO of the 3rd Man. “However, we can all become more
vigilant. Retailers need all the help they can get to prevent fraud
from occurring. If it’s a problem for them, it’s a problem for all
of us because costs get passed on. With the credit crunch biting
hard and inflation at its highest for several years, that’s the last
thing we need.”
The 3rd Man is a leading provider of fraud screening services which
detect fraud patterns by comparing transactions from different
retailers. 192.business.com specialises in aggregating databases
against which leading ecommerce providers run customer identity
checks.
The fraud prevention tools provided by both companies have become
accepted as de facto processes for the ecommerce industry and will
now be offered as an integrated service. Through their partnership,
both companies provide a dual ID check and fraud screening solution
available to retailers.
Nick Gibson, editor
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