The faceless crime – could your credit file expose contactless fraud

Posted by Ben Ryland in Identity Theft on 20 October 2016 - Ben is a Senior Credit Analyst at checkmyfile.

How often do you check your credit file for fraud? Did you know your credit file can be the first indication for many unsuspecting people that identity fraud has been committed?

It is more important than ever that we remain vigilant for identity fraud as it is such a prevalent crime now that nearly all of us would know someone who has been a victim of fraud or been a victim ourselves.

Whether it’s checking bank statements regularly online or being wary of post from credit card providers, banks or loan providers that you have no account with, checking your credit file regularly is a really useful tool in spotting fraud early and limiting its damage on your credit file and your stress levels.

Any time there is an advancement in how we pay for goods and services, fraudsters will be devising new ways to defraud the public who unwittingly trust the system is fool proof. The latest to be under attack is using your debit or credit card to make a contactless payment. It seems that people are unknowingly having their contactless cards read by card-reading equipment which the fraudsters can do as you walk down the street.

Tests have shown that the card reading equipment (which fraudsters can buy online for as little as £30) can read a contactless card through pockets and handbags, whether the victim is merely walking along the street or sat in a café or restaurant. The ease with which your card information can be scammed is alarming as it is easy for the fraudster to go on and steal your identity having scammed the contactless card.

While official figures show that fraud committed using this card-reading technique is at the moment rare, as with all new fraud practices it is only a matter of time before more and more victims step forward and report that fraud has occurred by this means.

Nearly all of the major banks and building societies provide contactless cards to customers with an estimated 92m currently in use across the UK. The top limit of what can be spent using contactless payment started at £20 and is now at £30, meaning anything costing this or less you simply touch the PIN reader with your card and the transaction is complete. Removing the need to enter your PIN number entirely. The UK Cards Association has estimated that nearly one in five card transactions are made via this contactless method, and those in the industry are suggesting increasing the top limit to transactions up to the value of £50.

But with increased contactless transactions comes the increase in fraud. From January to June last year fraud attributed to contactless cards was £516,500, yet this year during the same period the value of the fraud associated has risen to £2.9m. These statistics further suggest that as contactless payments rise, so will the risk of contactless fraud.

The major problem with fraud committed this way, is that due to the limit of £30, it is more easily missed when checking a card statement. Morgan Rothwell, of Defender Note, highlighted this point saying, “If someone stole £500 out of your bank account you'd notice straight away. But many people may not miss £30 until they check their bank statement at the end of the month.

”By then they may just assume they've just forgotten what they bought, and not report it. In the meantime the fraudster could have pocketed thousands of pounds by trawling up and down high streets and train station platforms, targeting hundreds of unsuspecting victims.”

Following tests carried out to check the effectiveness of these ‘card-readers’, it found that it was fairly easy to read a card that was in a jacket pocket and could be easily missed by the victim if their jacket was on the back of a chair in the pub or restaurant.

The device used couldn’t focus on one contactless card if there were more than one card with this facility in the wallet or purse, so if you have more than one contactless card in your wallet or purse your chances of being a victim to the card-reader are reduced.

Contactless payments have undoubtedly made paying smaller amounts easier in shops, restaurants and pubs but even the best system is susceptible to fraud. Staying vigilant when out and about and not leaving your wallet in a coat or jacket unattended can help you to stave off the threat of contactless fraud. Checking your credit file regularly can also help identify where fraud has been committed unbeknownst to you.

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