HSBC Merchant Services – Lost, stolen and card not received

Lost and stolen card fraud

This type of fraud occurs on cards that have been reported as lost or stolen by the cardholder. Fraudulent transactions have often been undertaken before the card issuer has been notified of the loss.

Shared intelligence within the financial sector has kept increases of lost and stolen card fraud to a minimum (£112.4m in 2003 to £114.4m in 2004). However, since the adoption of chip and PIN, fraud in this category has already fallen dramatically to £56.2m in 2007.

Card not received fraud

Card or mail not received fraud occurs where a genuine card has been sent to the cardholder by the card issuer but has been intercepted before receipt, either in the postal system, or at the delivery address. The latter is particularly prevalent where there is shared accommodation with communal letterboxes.

Card not received fraud rose throughout 2004 with the accelerated issue of replacement chip and PIN enabled cards (increased by 62% to £72.9m in 2004). In an effort to combat this type of fraud, card issuers utilise a number of different strategies, including card collection from a local bank branch and requesting the cardholder to contact the issuer to register receipt of the card before it can be used.

As a result, fraud in this sector fell by 45% to £40.0m in 2005, and continues to decrease (reduction of 62% to £15.4m in 2006, and a further 34% to £10.2m in 2007), which is largely attributed to Chip and PIN.

Retailers are advised to take additional care when undertaking large transactions on newly valid cards and should not rely solely on the signature check; this will match, as the criminal will have a blank signature panel when the card is intercepted.

Sources of further information

Home Office websites on prevention and reduction of crime and on Identity Fraud.

www.homeoffice.gov.uk/crime/preventionadvice/index.html

www.crimereduction.gov.uk/cpindex.htm

www.identitytheft.org.uk