Lost stolen cards 2009

Lost and Stolen CardsA CPP white paper

July 2009

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Lost and Stolen Cards July 2009

1.1 Foreword

1.� Industry Facts

1.3 Research methodology

1.4 Key Findings

- There has been a 17 per cent increase in lost and stolen cards abroad

- ATM charges, the exchange rate and card fraud are the top three

concerns when travelling abroad

- A fifth of consumers only use cash when abroad

- People check their bank statements on their return, but have an

inconsistent attitude to financial security when abroad

- A quarter of consumers are more concerned about card fraud

this year

- Most theft and loss takes place in bars or on public transport

- 43% said card theft/loss was extremely stressful

- A quarter of people said fraud took place as a result of the theft/loss

1.5 Conclusion

1.6 Avoiding card fraud abroad

1.7 Further Information

1.8 About CPP

Contents

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1.1 Foreword

Despite the recession, the annual family holiday does not seem to be adversely affected with many families still planning on travelling abroad this year. According to this report over 14 million people will be jetting off for a holiday and whilst many will be vigilant with their personal possessions, there are many who will not take adequate precautions despite card theft being an extremely stressful episode.The most recent payment statistics show UK consumers used their payment cards for £27.8bn of overseas transactions in 2008, 10% up on 2007. The ubiquitous use of plastic, the reduced reliance on travellers’ cheques and the frequency of international travel are driving these transactions, and at the same time, driving an increase in the number of lost and stolen payment cards.

At CPP we have noticed a significant increase in policyholders calling our emergency loss reporting line in the last 12 months and therefore a greater need for CPP to provide overseas assistance. The increased frequency of theft and loss will contribute to the rise in card fraud abroad on UK-issued cards, which went up 11% in 2008 to £230.1m. Lost and stolen cards are not responsible for all this fraud as a key driver for fraud abroad is lost and stolen UK-card details being used to make fake magnetic stripe cards for use in countries yet to upgrade to Chip and PIN.

What this report highlights is that consumer behaviour is still not consistent with protecting financial information and more needs to be done to reduce the risk of theft and fraud; perhaps through education and awareness. Nearly all victims report the theft and loss of their payment cards abroad as a very stressful experience, highlighting the continued need to provide rapid assistance, support and professional resolution services.

Card fraud abroad on UK-issued cards went

up 11% in 2008

to £230.1m

Introduction

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1.� Industry Facts

Total card fraud and fraud abroad on UK-issued cards continues to increase despite the best efforts of the industry to control it.

Total card fraud losses totalled £609.9m in 2008 up 14 per cent on 2007

Fraud abroad committed by criminals using stolen UK-card details in countries yet to upgrade to Chip and PIN totalled £230.1m up 11% and double since 2006

There has been a marked decline of retailer or face-to-face fraud in countries using the Chip and PIN verification system, for example, France, where Chip and PIN roll out has been completed. However, fraud on UK-issued cards in countries not using Chip and PIN has increased. In the USA fraud has increased 181% since 2005, to £31.7m in 2008 and it is the top country for fraud abroad on UK-issued cards

Fraud in Canada and Australia has also increased with fraud losses in both countries standing at £10.8m. There is also significant fraud in Spain (£10.1m) and Italy (£8.3m)

As more and more countries implement their Chip and PIN roll-outs, it is expected more and more fraud will migrate towards countries such the USA, which currently has no plans to implement secure verification

Bahrain is the latest country to rollout Chip and PIN technology – from June 30 2009 all banking institutions have to issue new debit and credit cards with the secure microchip technology

Fraud on lost and stolen cards in the UK totalled £54.1m in 2008, down 4%. Currently speaking, lost and stolen cards can be used in shops that do not have Chip and PIN verification, or they can be used to commit fraud via a telephone, internet or mail order transaction. Thanks to Chip and PIN, retailer fraud is at its lowest since the industry collation of fraud losses began in 1991

It will be interesting to monitor lost and stolen fraud figures once contactless payments are rolled out across the UK – as Chip and PIN verification is only required to reactivate the contactless functionality once a cumulative number of transactions or spend is reached.

Source:APACS–theUK’spaymentsassociation2008

1.3 Research Methodology

CPP commissioned research in June and July 2009 to look at the issue of payment cards being stolen or lost overseas, and whether consumer attitudes to financial security were contributing to the upward trend.

A representative sample of 2,006 UK credit and debit card holders aged 18+ were questioned by Tickbox.net/Opinion Matters.

The report also draws on figures from APACS, the UK’s payment association.

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Fraud on lost and

stolen cards in the UK totalled

£54.1m in 2008

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1.4 Key Findings

There has been a 17 per cent increase in lost and stolen cards abroad

Between June 2008 and May 2009 there was a 17 per cent year-on-year increase for emergency loss reports handled by CPP outside the UK (8,170 verses 6,984). The top countries for loss reports are Spain, France and the USA.

With over 12 million UK visitors to Spain annually, it is not surprising this popular overseas destination has twice as many incidences of theft and loss.

A number of other popular destinations have moved up the list including Thailand (from fifth to fourth), Portugal (from eleventh to seventh), and Greece (from ninth to eighth).

Losing your cards is a huge inconvenience, which can be particularly stressful in an overseas country where you might not speak the language and don’t know what to do. In countries that have not adapted Chip and PIN verification, for example, America, Canada and Australia the risk of retailer or face-to-face fraud is much higher as a signature is all that will be required to authorise payment. The threat of card-not present fraud (over the phone, internet and mail order), however, is prevalent across all countries as a criminal has all the details on the cardholder’s payment card – this emphasises the urgent need to cancel lost and stolen cards immediately.

Some countries not on the tourist trail, but that make the list of countries where CPP has helped policyholders include Afghanistan (11), the Lebanon (7) and Iraq (3).

CPP Data: Number of loss reports outside the UK

Rank Country Number of emergency Rank last year loss reports (outside the UK)

1 Spain 1736 1

2 France 742 2

3 USA 579 3

4 Thailand 374 5

5 Italy 349 4

6 Australia 304 6

7 Portugal 181 11

8 Greece 155 9

9 South Africa 151 10

10 Germany 150 8

Source:CPPdata–lossreportsduringJune2008toMay2009bynon-UKcountries

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ATM charges, the exchange rate and card fraud are the top three concerns when travelling abroad

Hidden ATM charges, the fall in the value of the pound from historic highs and the threat of card fraud are the main concerns of British holidaymakers travelling overseas.

Other concerns are their cards will be cloned; will have additional transactions added and that they may be taken out of sight when paying for goods and services. 7% of travellers think it is too much trouble to tell their bank they are going abroad and 6% do not bother taking their payment cards on holiday perhaps preferring to take other forms of payment such as cash and traveller cheques.

Those aged 45-54 are the most concerned about fraudulent activity (33%) verses only 18% of 16-24 year olds. This younger demographic are also least likely to consider telling their bank they are travelling abroad. Those aged 16-34 are, however, the most concerned about being charged for using foreign ATM machines.

Q: Which of the following statements do you agree with when abroad?

7% of travellers think it is too much trouble to tell their

bank they are going abroad

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�0% of consumers only use cash when abroad

Perhaps because of the threat of card fraud, nearly one fifth of travellers report only taking cash abroad on holiday, however, the majority (39%) use a combination of payment methods.

16-24 year olds are most likely (30.2%) to exclusively use cash perhaps because they are most concerned about expensive ATM charges, whereas those aged 45-54 are the least likely (14.7%) to rely solely on cash.

Ironically, consumers put themselves more at risk if they decide to only use cash as debit and credit cards can be cancelled before any fraud occurs. The loss of cash also means that holidays could be ruined as victims may be left with no funds in the short-term. Cardholders are also protected by the Banking Code for card fraud as long as they have not acted with unreasonable care, for example, carrying their PIN number with their cards.

Q: Which of the following payment methods are you reliant on when you go abroad on holiday?

People check their bank statement on their return, but have inconsistent attitude to financial security when abroad

Over half of consumers check their receipts against their bank statements when they return home and 30% take a note of all their card details or use a concealed money belt to protect their personal possessions when abroad.

Over half of consumers check their

receipts against

their bank statements when they

return home

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28% of consumers also informed their bank they are going abroad – probably so their cards are not blocked by what looks like an unusual transaction. According to APACS – the UK’s Payment Association, however, most banks do not have the infrastructure to act on this information, and it is better advice to give your bank an up-to-date mobile phone number. This is so they can directly check with the cardholder if a transaction is genuine, or not, before deciding to block the card. The big rise in fraud abroad on UK-issued cards in 2008 (£230m, up 11%) is one reason banks and card companies are being extra vigilant about overseas transactions, which can sometimes result in legitimate transactions being declined. Last year, Britons used their payment cards for £26.8bn of overseas transactions, 10% up on 2007.

More concerning, 28% have hidden cash and cards in their hotel room rather than use the hotel safe, 13% let waiters take their cards out of sight and 12% leave their bags unattended on their sun-lounger - behaviour that puts them at real risk from card fraud.

Those aged 55+ are most likely to look after their personal possessions whilst abroad and twice as likely (61.8%) to check their statements against receipts when they return home than those aged 16-24 (33%).

Q: Which of the following statements do you agree with when abroad?

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A quarter of consumers are more concerned about card fraud this year

Looking generically at the issue of card fraud abroad, a quarter of people are more concerned compared to twelve months ago. Surprisingly men are more concerned than women. Not surprisingly those aged 55+ are most concerned about fraud (29%).

Regionally, Belfast (45%), Sheffield (36.8%) and Cardiff (31.9%) are the cities most concerned about increased card fraud. Birmingham (16.6%), Edinburgh (21.5%) and Norwich (23.8%) are least concerned.

Q: Are you more or less worried about credit / debit card fraud compared to this time last year?

Regionally, Belfast,

Sheffield and Cardiff are the cities

most concerned

about increased card fraud

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Most theft and loss takes place in a bar or on public transport

As you might expect most British people have their wallets or purses stolen in a bar (24%), or on public transport (15%). Nearly a quarter (24%) did not know where the theft or loss took place, which is not unsurprising. Nearly 6% have their wallets and purses stolen at the airport, which is undoubtedly a terrible start to a holiday.

When asked how stressful card theft/loss is, the overwhelming majority (95.5%) said it was quite, very and extremely stressful with 43.3% specifically saying it was extremely stressful. This substantiates the value in Card Protection; a product designed to assist policyholders in cancelling and reordering all lost/stolen cards with one free phone call from anywhere in the world, 24 hours a day.

Women (47%) are more likely to report it stressful than men (36%) perhaps because the theft took place from the person. All ages reported the theft/loss as stressful.

Q: Where did the loss/theft take place?

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A quarter of people said fraud took place as a result of the theft/loss

26% of people said fraud occurred as a result of losing or having their cards stolen or lost.

This was slightly higher for women (28%); there is no obvious reason for this other than it may have taken women slightly longer to report the theft or they pay more attention to their financial affairs. Those aged 25-34 are slightly more aware of any fraud happening as a result (33%) than the other age groups questioned.

Q: Did any fraud take place as a result of the loss/theft?

26% of people said fraud

occurred as a result of losing or

having their cards stolen

or lost

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1.5 Conclusion

With holidays still a priority for people despite the recession, it is not surprising there has been a 17% increase in the number of lost and stolen cards reported to CPP over the past 12 months.

With Brits using their card abroad more than ever – the decline of travellers’ cheques, and the ubiquitous use of plastic, it is no surprise that a quarter of people are more concerned about fraud this year. Other concerns revolve around expensive ATM charges, the volatile exchange rate and card fraud. As a result of the worries around card fraud, a fifth of consumers will only use cash when abroad. Ironically, paying by card is the most convenient and safest way to pay for items overseas. As long as cards carry an international card scheme brand, such as American Express, MasterCard or Visa, they can be used at most shops and ATMs around the world. Importantly consumers will get their money back from their credit card company if goods are faulty or are not delivered and they have spent between £100 and £30,000 under Section 75 of the Banking Code. This protection does not apply to debit card purchases.

Furthermore cash withdrawal fees from foreign ATMs are normally charged at around 2% - a cost some consumers in this report have voiced concerns about. It is, however, much cheaper to withdraw money via debit cards from cash machines than to exchange cash locally. As in the UK, interest charges apply for cash withdraws on credit cards, so consumers should check their card issuers’ charges to avoid any unexpected costs.

As you might expect most theft and loss takes place in bars and restaurants and a quarter said fraud took place as a result of their cards going missing. Whilst half of consumers check their receipts against their statements on their return, many have a lax or inconsistent attitude to financial security when abroad – a significant minority hide cash and cards in their hotel room despite facilities and housekeeping having access to their rooms. Just as worrying consumers are still letting their cards disappear out of their sight in restaurants and shops allowing them to be easily cloned and copied for CNP fraud – behaviour it could be argued is inconsistent with acting with reasonable care.

Not surprising, the vast majority said having cards stolen or lost abroad was extremely stressful.

Most theft and loss

takes place in bars and restaurants

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1.6 Avoiding card fraud

Kerry D’Souza, is a card fraud expert at CPP and offers the following advice to consumers to help protect themselves from payment card fraudsters. Kerry has over ten years’ experience and is responsible for CPP’s industry-leading Card Protection product that assists people in the event of lost and stolen payment cards.

Kerry is media trained across print and broadcast and is available for media interviews on the issue of payment fraud.

CPP’s top tips to reduce the chances of falling victim to card fraud abroad:

Don’t carry multiple debit/credit cards in a wallet

Don’t leave belongings unattended while swimming or sunbathing

Don’t hang your bag on the back of a chair

Don’t carry debit/credit cards loose in a bag or pocket

Make sure your bank has up-to-date contact details for you ,including your mobile phone number incase they need to check if transactions are genuine

If your cards are registered with a Card Protection company make sure you have their emergency 24-hour loss reporting number

Don’t let a waiter/shop assistant take your debit/credit card out of sight

Don’t let someone else take money out on your behalf

Use a safe rather than leaving your debit/credit cards in a hotel room

Check your receipts against your statements when you get home

1.7 For further information please contact:

Nick Jones PR and Communications Manager CPP Group Plc Holgate Park York YO26 4GA

Tel 01�04 544 387 E-Mail [email protected] Web www.cppgroup.com

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CPP is an award- winning organisation:

Named in the Sunday Times �008 PricewaterhouseCoopers Profit Track 100

Finalists in the National Business Awards, 3i Growth Strategy category, �008

Finalist in the National Business Awards, Business of the Year category, �007 and Highly Commended in �008

Named in the Sunday Times �006, �007 and �008 HSBC Top Track �50 companies

Regional winner of the National Training Awards, �007

Winner of the BITC Health, Work and Well-Being Award, �007

Highly Commended in the UK National Customer Service Awards, �006

Winner of the Tamworth Community Involvement Award, �006. Finalist in �008

Highly Commended in The Press Best Link Between Business and Education, �005 and �006. Winner in �007

Award Finalist in the National Business Awards, Innovation category, �005

Award finalist for the �003 The Royal Bank of Scotland Sunday Times Business Awards

Recognised as one of the Growth Plus Europe 500 companies

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1.8 About CPP

The CPP Group Plc (CPP) is an international marketing services business offering bespoke customer management solutions to multi-sector business partners designed to enhance their customer revenue, engagement and loyalty, whilst at the same time reducing cost to deliver improved profitability.

This is underpinned by the delivery of a portfolio of complementary Life Assistance products, designed to help our mutual customers cope with the anxieties associated with the challenges and opportunities of everyday life.

Whether our customers have lost their wallets, been a victim of identity fraud or looking for lifestyle perks, CPP can help remove the hassle from their lives leaving them free to enjoy life. Globally, our Life Assistance products and services are designed to simplify the complexities of everyday living whether these affect personal finances, home, travel, personal data or future plans. When it really matters, Life Assistance enables people to live life and worry less.

Established in 1980, CPP has 11 million customers and more than 200 business partners across Europe, North America and Asia Pacific and employs 2,000 employees who handle 16 million consumer sales and service conversations each year.

In 2008, Group revenue was £259.5 million, an increase of more than 15 per cent over the previous year. This is more than five times the sales level of 2000.

What We Do:

CPP provides a range of assistance products and services that allow our business partners to forge closer relationships with their customers.

We have a solution for many eventualities, including:

Insuring our customers’ mobile phones

Protecting the payment cards in our customers’ wallets and purses, should these be lost or stolen

Providing assistance and protection if a customer’s keys are lost or stolen

Providing advice, insurance and assistance to protect customers against the insidious crime of identity fraud

Offering advice to people considering legal action and cover for the costs involved in taking action on a range of legal issues

Providing discounts on everyday lifestyle commodities

Monitoring the credit status of our customers

For more information on CPP visit:

www.cppgroup.com

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Travel

Lost stolen cards 2009