13 October 2004

Fraudsters will use the time between now until the full implementation of Chip & PIN in the New Year to take advantage of lax security procedures, warns specialist IT consultancy, Detica. This problem has been highlighted by a recent report from the Association of Payment Clearing Services (APACS) showing that mail theft of credit cards has increased by 51 per cent over the past year.

David Porter, Head of Security and Risk at Detica, explains: "Mail theft is a problem which could be easily overcome by, for example, the use of recorded delivery and users activating cards upon receipt. This is a familiar situation which issuers really should have got to grips with by now, particularly with eight million cards going out each month in the run up to Chip and PIN. However, equally serious is what happens after Chip and PIN goes fully live in January."

Porter continues: "The worst mistake to make would be for card issuers and retailers to think that once Chip & PIN is in force they'll largely be safe from fraud. Change is the fraudster's friend so expect to see them exploiting confusion around the scheme - as they are doing already - and insisting that retailers accept signatures instead of PIN numbers or taking advantage of scenarios where the card holder cannot be present such as Internet transactions. Also, identity theft is the fastest growing form of fraud and issuers should be tightening up verification checks before approving the cards in the first place."

The 'human' aspect of fraud is often the most over-looked, Porter concludes: "Much of the investment in the last decade has been spent focussing on technology-based prevention and detection systems aimed at the minority of 'hard fraudsters' - this is important but people are always the weakest link, not technology. The vast majority of people are neither totally bad nor totally good but somewhere in-between, and will often take short cuts or turn a blind eye to fraud. This can range from insiders within large organisations disclosing what they mistakenly think is innocuous information to shop floor staff not insisting on PIN numbers at the till when a Chip and PIN-enabled card is presented.

"It is up to companies at all stages of the process to tighten up procedures and for consumers to realise card fraud is not a 'victimless' crime. On the contrary, the proceeds gained from it frequently fund other forms of crime such as drug trafficking and terrorism, which affect us all."

Nick Miles Text 100 Public Relations Tel: +44 (0)208 846 0700 email: