The ever so secure Chip and Pin system may actually be full of holes…
Credit cards and debit cards are viewed as relatively secure methods of making purchases; however as with any security measure there are people who will try to find their way around it. Various increasingly complex methods have been devised to access bank accounts by obtaining the consumer’s details such as scanning and copying the electronic strip on the back of the card to create duplicates which can be used to siphon off funds.
Chip and Pin was devised as a means of making it much harder for criminals to make useable copies of bank or credit cards, and so significantly reduce the security risks surrounding card transactions in the UK. The system has been hailed as a major step in crime reduction.
According to consumer finance comparison site Moneynet (http://www.moneynet.co.uk ), “the introduction of Chip & PIN has contributed to the rising popularity of debit and credit cards. Two-thirds (63 per cent) of people surveyed by A&L say they prefer to pay by plastic on most occasions and 11 per cent attribute this to Chip & PIN.”
Unfortunately, after only a few months since the compulsory universal conversion of all cards in the UK to the chip and pin system, stories are now emerging of ways which the chip and pin security is being breached.
The petrol station giant, Shell, has recently suspended all chip-and-pin payments in 600 of its UK petrol stations following the fraudulent removal of over Ј1m from customer accounts. The criminals are reported to have managed to get into “tamper resistant” Pin pads, in order to commit their theft. As a result payments have been reverted to the supposedly less safe card swipe and signature system.
The Association of Payment Clearing Services (APACS) has been quick to highlight that the fraud is only related to just the one petrol chain, although two BP filling stations in Worcester were recently temporarily shut down as part of investigation into a scam where Ј250,000 was taken from 167 people after using the stations and then shortly after, their credit card details were used in Bangkok.
Although chip and pin, by making customers verify transactions using a pin number rather than a signature, has made it harder for criminals to use stolen debit and credit, industry figures show total card fraud in the UK fell by 13% to Ј439m last year, with card counterfeiting along with lost or stolen card fraud dropping by 24% to Ј58.4m, fraudsters have already discovered several other ways to get round the tougher security.
These days, with internet and phone shopping, fraudulent transactions can even be completed in a variety of ways with just the card number. “Criminals are increasingly turning to the Internet to relieve consumers of their money and goods as the introduction of Chip and Pin cards has made credit card fraud harder,” said Moneynet chief executive Richard Brown.
There has also been an increase in criminals copying bank and credit cards in the UK and then using them in smaller shops that cannot afford the chip and pin payment devices, or by taking the card abroad where chip and pin is not as prevalent and so they can bypass the additional security offered.
In response to the new threats, the major card providers are keen to reassure consumers. Lloyds TSB has said that it has moved to close the gaps in its security system, and anyone who had lost money through the fraud would be reimbursed. Barclaycard (http://www.barclaycard.co.uk ) advises bank and credit card customers to, “Check your accounts regularly. Look for transactions you don’t remember making or recognise. If in doubt, note the details and report it to the helpdesk immediately.”
All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.
You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.