Chip and pin has helped cut credit card fraud for the first time in a decade, it was claimed, as figures showed a sharp drop in card crime in 2005.


The amount lost in credit and debit card fraud dropped last year by 13pc to £439m, according to UK payments association Apacs.
The news will reassure card users, following a number of reports that online fraud has accelerated since the adoption of chip and pin.


Apacs communications director Sandra Quinn said that the fall recorded in 2005 was the first since 1995.

"Seeing card fraud losses come down is cast-iron proof that chip and pin is doing its job," she said.

"Back in 2002 we forecast that fraud would have risen to £800m in 2005 if we didn't make the move to chip and pin so it is heartening to see total losses well beneath this figure."

However, she warned that fraudsters had not necessarily been persuaded away from a life of crime, but had instead focused their efforts elsewhere.


Online banking fraud almost doubled to £23.2m, as many internet users succumbed to email traps laid by criminals masquerading as their bank or building societies. Internet, telephone and mail order fraud also rose 21pc to £183m.


A recent study from KPMG found that fraud soared to nearly £1bn in 2005 - the highest level for a decade - with most of the perpetrators using methods of identity fraud to dupe households.



Ms Quinn said:

"Of course, while our cards are safer than ever before, the fraudsters clearly are not going to give up so neither will we.

"Now chip and pin is in place the banking industry is discussing how to better protect card-not-present transactions and we hope this will lead to progress later this year."

The chip and pin system - whereby a pin code replaces a signature as verification of a purchase - has also made life tougher for manufacturers of fake credit cards because the microchip included in the new breeds of credit cards is harder to duplicate.


Apacs said that counterfeit card fraud fell 25pc to £96.8m in 2005, while fraud on stolen or lost credit cards was down 22pc to £89m.
Meanwhile, the amount lost when a new card is intercepted in the post dropped 45pc to £40m. Apacs also attributed these falls to the roll out of chip and pin.