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The Social Market Foundation (SMF) has released new data revealing that the UK is the card fraud capital of Europe, which will be unsurprising news to concerned regulators and payments players.
Britons suffer far more card fraud and resulting losses than people in any other European country, the SMF revealed.
“Britain’s shocking record on card fraud compared to major European economies is yet another reminder of how UK law enforcement has failed to keep up with the epidemic. Policymakers need to reflect further on why we’re at this stage,” said Richard Hyde, a senior researcher at the think tank.
SMF, which has close links to the UK’s main political parties, analysed data from the European Central Bank (ECB), revealing that the UK has the most victims with 134 per 1,000 people.
The UK is followed by France (115), Spain (37), Italy (19) and Germany (16) among Europe’s top five leading economies.
Meanwhile, the cost of fraud per person in the UK is £9 annually, compared with £6 in France and just £1 in Italy.
However, it should also be noted that comparatively speaking UK consumers are far greater users of cards than many of their European counterparts, particularly when compared with the top five economies.
According to VIXIO analysis, in 2021, UK cardholders made an estimated 344 card transactions per capita, way above France (235), Spain (161), Germany (99) and Italy (88).
At the same time, the UK is also the biggest e-commerce market in Europe. According to data published by Statista, UK shoppers spent £212bn online in 2021, double that of France (£103bn) and Germany (£84bn), three times the size of Spain (£69bn) and more than six the size of Italy (£33bn).
Card-not-present transactions, which are predominantly e-commerce, have significantly higher fraud rates than other types of card payments. According to UK Finance, card-not-present fraud accounted for 79 percent of all UK card fraud in 2021.
A combination of greater comparative usage and, in particular, greater card spending online can therefore help explain why the UK stands out from the rest when it comes to fraud.
A UK problem
Although these mitigating factors might help explain the UK's unenviable position as Europe’s leading fraud market, this issue has nevertheless been a significant headache for both payments firms and authorities for some time.
Many leading players have admitted that something drastic needs to change.
Research from payments software company ACI Worldline revealed last week that 12.1 percent of UK consumers have been victims of fraud, and called for an overhaul of fraud-fighting strategies.
“Solving the crisis will take more than just increased police staff,” said Hyde. “While specialist staff will undoubtedly play a crucial role, the entire fraud law enforcement landscape needs an overhaul, with reforms that will transform the system and enact lasting change.”
There is no time for delay, Hyde continued, pointing out that fraud and economic crime is evolving to be more difficult to investigate and solve.
“Policymakers must start to make comprehensive system changes now.”
When approached by VIXIO, a spokesperson for the Payment Systems Regulator said: “Everyone should be able to make payments safely and with confidence.”
Although there are hopes that the strong customer authentication (SCA) rules will reduce card fraud in the UK, it is still powerless to deal with authorised push payment (APP) scams, which the PSR spokesperson said has been its main focus. “This continues to have a devastating impact on people. We know that in the first half of 2021, £355 million was lost to APP scams, overtaking card fraud losses.
“That’s why we’ve used our powers to ensure that around 400 more financial firms offer the added security of the vital name-checking service Confirmation of Payee — CoP — to their customers,” the spokesperson said. “We’re also preparing for proposed legislative changes which will allow us to make reimbursement for victims mandatory, as set out in the Financial Services and Markets Bill.”
