Debit and credit card fraud losses rose 14 percent in the UK last year but that wasn’t enough to stop France deposing it as the top country for plastic crime, analytics firm FICO has reported.
Using Euromonitor International data, in 2012 France accounted for 29 percent of Europe’s losses (for all types of card fraud), the UK 27 percent, the first time in a decade the UK has not had the dubious honour of suffering the worst rates of card losses.
The UK has been on a downward path since 2008, the country’s peak year for fraud. Since then, losses have fallen 36 percent in total; France’s rose 65 percent in the five years to 2012.
This rise was equivalent to €174 million (£148 million) of extra fraud, FICO said. In 2012, UK card fraud totalled €410 million, France’s €442 million.
“France was the founder of the Chip and PIN strategy for Europe, but the UK has taken a particularly tough stance against fraud in recent years, using the latest advanced fraud technology,” argued FICO European fraud chief, Martin Warwick.
Looking at 21 countries in total, an area of worry was Russia, which at €91 million was now reporting fraud levels three times what they were in 2010. Germany remained ahead of it on €144 million.
“Fraud is like a balloon - if you squeeze it out of one scheme, or one country, it bulges somewhere else,” said Warwick.
“Any successful reduction in fraud, like that driven by Chip & PIN, typically results in criminals changing their modus operandi to find a different weak spot, and fraud levels starting to climb again.”
What FICO’s detailed map of European card fraud does reveal is how localised certain kinds of fraud can be. For instance, in the UK the largest chunk of fraud is 'card not present' (CNP) fraud, for typically speaking Internet transactions where no Chip and PIN number is required.
In France, by contrast, CNP fraud is only the fourth most common type of fraud, topped by some margin by ID fraud.
One explanation – possibly favoured by FICO which sells fraud analytics systems – is that countries such as the UK have been investing in this layer of security to back up Chip and PIN security. It is also possible that local financial services cultures and regulations play a part; France’s unusually high levels of ID fraud suggest a specific factor could be in play.
“Clamping down on fraud can help banks minimise losses but can also result in a more frustrating customer experience, as shoppers’ cards may be blocked unnecessarily,” noted Warwick.
“When the negative impact on customers outweighs the benefits of tighter fraud prevention methods, banks relax their controls, inevitably leading to another rise in fraud.”
This tended to result in a “saw-tooth” see-sawing in losses as systems and checks were tightened and then relaxed, he suggested.