Cash on the comeback as 7 million Britons fall foul of credit card fraud

A new study suggests the problem of theft and fraud around plastic cards is far more serious than previously believed.

The big banks claim to have tamed card fraud with the introduction of the chip and PIN security regime this year.

However, there are concerns that criminals are already finding ways to beat the system or simply changing their methods.

This is the first study that puts a figure on the number of Britons who have suffered card fraud - approximately 19per cent or seven million.

As a result, almost one in four people - 24 per cent - say they are using cash more often because they see it as more secure.

The research was financed by the European Security Transport Association (ESTA), which is concerned about plans by the EU to promote card use, rather than cash, across all member states.

Currently, the British use more credit and debit cards than any other nation in Europe. Brussels is keen to boost take-up in other nations.

ESTA surveyed consumers in eight EU countries. Some 11per cent had suffered card fraud, which is equivalent to 22.8m people.

Mike Bowen of ESTA said: "It is incredible how many people across Britain have fallen victim to card fraudsters and unsurprising that so many victims favour a return to cash.

"Indeed a separate study by the European Commission has found that almost a third of card fraud victims are never reimbursed for their loss by their card provider, despite claims to the contrary by banks.

"These findings come amid an ongoing campaign by the electronic payments industry to see credit and debit cards used as the preferred method of payment and as the European Commission debates ways to reduce the use of cash.

"Consumers should have the freedom to choose how they pay and should not be dictated to by banks and regulators looking to increase revenues from electronic transactions."

ESTA has a vested interest in that its members make money from transporting cash.

The big banks introduced the chip and PIN security regime for debit and credit cards in February in what was billed as a breakthrough in the fight against financial fraud. The four digit PIN has replaced the signature to authorise purchases.

The change cost more than £1 billion to implement. It led to the issuing of 140 million new cards and the installation of thousands of new till terminals.

However, while card fraud in the high street has fallen by close to 50per cent, the criminals have simply changed their money-making methods.

These include fixing hi-tech devices to the front of cash machines to steal card details. As a result, losses linked to this rose 37per cent in the first half of the year to £39.6m.

The net effect was that total card fraud losses in the first six months of 2006 were down by only 5per cent compared to a year ago.

Director of Research of the Paris II University -Institut de Criminologie, Xavier Raufer, said: "Consumers are not being told the full story when it comes to card fraud and there seems to be an astonishing absence of published statistics on the issue from financial institutions worldwide."

He suggested only something like fingerprint recognition at tills and cash machines would deliver real benefits.

He said: "Banks also seem to be reluctant to implement robust security measures such as biometric technology across the card payments network. Surely consumers have the right to the best available security for their finances? Ultimately, paying by cash is the only way to avoid electronic fraud."

APACS spokesman, Sandra Quinn, said card fraud is falling. However, she said people need to take more care to protect themselves.

"Each and every one of us can also help defeat the fraudsters, and protect our cards and online accounts, by keeping our PINs, passwords and personal information safe and secure," she said.