New rules for reporting card, cheque and online banking fraud

This Sunday 1 April 2007, new procedures come into effect in England, Wales and Northern Ireland which means that banks and financial institutions become the first point of contact for cheque, plastic card and online fraud offences. In most cases consumers will be required to report instances of this type of fraud straight to their bank or building society and not to the police. It will be up to the financial institution involved, and not the account holder, to pass details of the relevant crime on to the police.

This change in the way fraud is reported has come about after the introduction of the Fraud Act 2006 and follows discussions between the Home Office, Association of Chief Police Officers (ACPO) and the financial sector. The aim is to reduce the level of bureaucracy involved in fraud recording and to streamline the reporting, recording and investigation of such frauds.

APACS statistics show that there were just over 700,000 cases of card fraud in 2006, with the average loss per case amounting to £608. One of the advantages for consumers unfortunate enough to be a victim of these types of fraud from 1 April onwards is that they will only have to report the details to their bank or the financial organisation involved. Previously they would have reported the matter first to their bank, then to the police, and then back to their bank to pass on relevant details given to them by the police.

Sandra Quinn, director of communications at APACS, says: “This change simply removes an additional level of reporting and will provide greater consistency for the reporting of fraud losses in the UK. APACS will provide the Home Office with the industry’s fraud figures for cheque, plastic and online banking fraud losses - these losses will then be published as part of the government’s annual crime figures, thereby giving a more realistic picture of the scale of this type of crime.”

Where an additional crime has been committed with the fraud, for example, the victim has had their wallet stolen or the card used fraudulently was stolen as a result of a burglary, then this should still be reported to the police. Fraud other than card, cheque and online banking fraud will be dealt with by the police in the same way as it is currently, using the Fraud Act legislation that came into force on 15 January this year.

Earlier this month, APACS released its full UK card fraud figures for 2006 showing that total losses have fallen by three per cent in the past year to £428.0 million – a decrease of £80 million over the past two years. Cheque fraud losses fell by 24% from £40.3 million in 2005 to £30.6 million in 2006. However, online banking fraud losses increased by 44%, up from £23.2 million in 2005 to £33.5 million last year.

Sandra Quinn continues: “The threat of fraud is, unfortunately, a part of our daily lives. Although card fraud losses have decreased for the past two years, the industry remains committed to a multi-layered approach to tackling card fraud.

“Part of this approach is educating consumers on what they can do to protect themselves from being a victim. APACS has produced a Personal Security Plan to offer advice and guidance on this topic. By following some common sense precautions (as detailed in the Personal Security Plan) people can significantly minimise their chances of becoming a victim.”

The Personal Security Plan includes advice on preventing card fraud, online fraud, cheque fraud and cash machine fraud. Copies can be downloaded free-of-charge from apacs.org.uk and cardwatch.org.uk.

The payments industry continues to commit and invest funds in programmes and initiatives to fight fraud. Over the past five years, the industry has:

Invested £1.1 billion in the rollout of chip and PIN

Established the Dedicated Cheque and Plastic Crime Unit (DCPCU) – the special police unit that specifically tackles plastic card and cheque fraud – a funding commitment of £3m per year by the banking industry

Promoted retailer take-up of the Industry Hot Card File (IHCF) – an electronic database that enables retailers to check whether a card is being used fraudulently. Over 335,000 cases of attempted fraud were prevented by this system in 2006.