Chip & Pin Vulnerable to Fraud
Despite being introduced in the UK to combat credit card fraud, Chip-and-Pin is increasingly vulnerable to the card fraudsters, according to a leading expert.
The warning comes from a man who knows about fraud, Frank Abagnale, who’s story was immortalised in the film Catch if you Can. Abagnale, now a fraud consultant, has warned that the credit card payment system is being targeted by increasingly resourceful, technologically informed and well-financed fraudsters. He added that the vulnerability lies in the fact that the information being transmitted by wireless Chip- and-Pin payment machines can be intercepted by a fraudster equipped with a laptop and snooping device.
With card skimmers now available online for as little as £100, other scams to steal personal financial details are becoming more successful.
Shell suspended the Chip-and-Pin scheme at 600 petrol stations this week after it was discovered that an excess of £1m was taken from customers’ accounts.
Abagnale, himself a master forger turned FBI anti-fraud consultant, points to the Shell incident as evidence of a new technology driven crime epidemic. “ Technology has made what I did very simple. Crime is getting easier, faster and harder to detect,” he said.
Although the Chip-and-Pin scheme has been relatively successful in driving down credit card fraud by 13 per cent to £439.5m, the reduction in card fraud has been less successful than some had hoped and the benefits of the scheme will further diminish as fraudsters exploit the frailties of the system.
Abagnale also predicts problems for the soon to be introduced UK identity card, predicting forgers will produce perfect replicas within six months of their introduction. This prediction further highlights the belief among fraud experts that fraudsters are becoming increasingly more sophisticated in their attempts to steal personal and financial information. It will also raise concerns, as identity theft is one area of fraud on the rise at an alarming rate. The Home Office estimates that ID theft costs the UK £1.7bn a year, affecting 100,000 victims a year in the UK.
However, Abagnale says victims of these crimes can expect inadequate help from the authorities. Banks tend to accept a degree of fraud as fighting it is so costly. Punishment for fraud and recovery of stolen funds “ are both so rare that prevention is the only viable course of action,” he adds.
Abagnale added that while all personal banking systems are susceptible to crime, some are more vulnerable than others. Thus, he advises against the use of cheques due to the vital personal information they carry and their usefulness in identity theft.
He also advises consumers’ not to use online banking services unless the bank accepts full liability for fraud.
Alisdair Milton
12th
May 2006
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