§ Mr. Jim CunninghamTo ask the Secretary of State for the Home Department what steps his Department is taking to address the issue of credit card fraud, with particular reference to cloning and skimming. [144733]
§ Mr. Charles ClarkeThe most prevalent type of counterfeit (cloning) involves copying genuine data from the magnetic stripe on one card, without the cardholder's knowledge, and putting it onto another card: a method known as skimming.
To combat this problem the banking industry took the decision in July 1998 to introduce onto United Kingdom plastic cards an embedded smart chip (also known as an integrated circuit card, ICC, or smart card). The information chip can store much more information than the magnetic stripe (which they will eventually replace) and can not be easily copied, amended or corrupted, so making counterfeiting prohibitively difficult and expensive for criminals to carry out. Although about 15 million chipped cards have been issued so far, only 150,000 retail terminals are kitted out to use the technology and so the remainder have to continue swiping the magnetic stripe. By 2003, however, the banking industry expects most transactions to be "smart".
It is most important that the roll of these new cards remains on schedule. This was one of a number of issues discussed at the seminar hosted by the Home Office in November for representatives from the banking industry, the retail community and law enforcement agencies, to report on progress since the first meeting held in June to examine the reasons for the increasing levels of card fraud. Further information on the projects discussed at that seminar is given in response to other Questions asked by my hon. Friend which I have answered today.
104WWhile this work continues and before the full benefits of chip technology can be realised, the banking industry is continuing with a wide range of initiatives designed to combat fraud. These include:—
Working closely with the police through a special intelligence unit based at Association of Payment Card Services (APACS), which has contributed to closing down a number of organised card counterfeiting rings.Use of "intelligent neural network" systems to spot fraud at an early stage.Introduction of hot card files carrying details of lost/stolen cards. Implementation of secure methods for delivering cards.Training material for retail staff to enable them to identify counterfeit cards.Rewards for retail staff who stop a card from being fraudulently used (£10 million was paid in rewards in 1999).Maintaining a close partnership between banks, retailers and the police.The banking/retail industries and the police service will also continue to inform the public how they can guard themselves against this particular crime. The key messages are:
Guard your cards-never leave them unattended and try not to let them out of your sight while in a shop or restaurant.Make regular checks to ensure you still have your cards. Report any loss immediately so as a stop can be made on your card.Do not discard your receipts-keep them safely and check them off against your statement.Contact your card issuer immediately if you spot any transaction you don't recognise on your statement.
§ Mr. Jim CunninghamTo ask the Secretary of State for the Home Department whom he has met recently to discuss credit card fraud. [144734]
§ Mr. Charles ClarkeThe Home Office hosted a second seminar in November for representatives from the banking industry, the retail community and law 105W enforcement agencies, to report on progress since the first meeting in June held to examine the reasons for the increasing levels of card fraud.
Though it was clear that much positive work is already being undertaken to tackle this area of fraud, presentations were made on those areas considered to be of strategic importance in tackling the problem of card fraud within the United Kingdom.
As one of a number of joint initiatives, the banking and retail communities are continuing to explore the introduction of chip cards, possibly with personal identification numbers (PINs) used at the merchant's point of sale across the United Kingdom. Cross-industry working groups are tackling the various technical, operational and business issues and are making good progress. The industry is expecting to make a final decision on chip cards and PINs in spring this year.
Two cross-industry groups, facilitated by the Home Office, were also set up after the first meeting in June to address specific issues relating to plastic card fraud. The first is considering the setting up of a dedicated law enforcement team, on an initial two-year pilot basis, to target, investigate and arrest offenders responsible for organised payment card and cheque fraud. The second group has identified the need for enhanced collection and analysis of intelligence at a 'central hub' where known fraud intelligence data from business and government agencies could be collated and interrogated by professional analysts. These groups hope to bring forward proposals in the spring.
§ Mr. Jim CunninghamTo ask the Secretary of State for the Home Department what impact recent incidents of credit card fraud have had on e-commerce; and what steps his Department is taking to address the issue of credit card fraud. [144729]
§ Mr. Charles ClarkeThe Government take the problem of card fraud very seriously and we liaise very closely with the Association for Payment and Clearing Services (APACS) to establish and promote best practice in protecting cards and their use on the internet.
Most of the fraud experienced by e-retailers is of the same kind as that suffered by ordinary retailers who accept "card not present" transactions over the phone or by mail.
Although the Association of Payment Clearing Services does not specifically record the level of fraud associated with the use of payment cards over the internet (these losses would normally be recorded as part of the "card not present" category), they estimate losses for 1999 to be around £4 million, some 2 per cent. of the total reported losses for that year.
I chaired a second Home Office seminar at the end of November to seek views from the banks, retailers and others about how the increasing levels of credit card fraud could be addressed. One of the main issues is the introduction of chip cards (card authentication), which would significantly reduce the use of fraudulent cards, and the introduction of a cardholder verification system, probably using a PIN number to confirm that the user of the card is genuine. This is currently being discussed between the retailers and the banks and the outcome of those discussions is expected later in the year.