Credit card fraud rockets

A new alert was issued today over credit card theft.

Millions of people are being warned that they are at risk of having new credit cards stolen from their post before they have even received them.

Latest figures show that fraud following the theft of credit cards from the postal system soared by 51 per cent to £61.2 million in the year to the end of June.

The crime wave comes as tens of millions of replacement credit and debit cards are despatched for the new "chip and pin" system.

The new cards carry a computer chip that matches up with a pin number that is punched into a pad at the till.

The system is designed to make fraud harder because no signature is involved and because the transaction is always carried out within sight of the customer. However, fraud experts believe criminals are taking advantage of the unprecedented number of cards in the post for a last "fraud feeding frenzy" before the new system takes effect.

So called "mail non-receipt" was the fastest rising form of credit card fraud last year. About 130 million chip and pin cards are due to be sent out.

Banks and other credit providers are desperate for the new cards to be operative before the end of the year. After 1 January retailers will be legally responsible for any fraud on credit cards under the new system rather than banks. Fraud experts warned that many cards are not being sent by secure courier and some may have even been activated before being posted.

Cards that fall into the wrong hands can be used for transactions over the phone. It can be weeks before the customer realises a fraud has taken place when the first bill for the new card comes in.

About 14 million items go astray in the post each year, of which only a small proportion are officially recorded as theft. Although some thefts are thought to be "inside jobs" by mail staff, many are also stolen when mail is left unattended, for example in the entrance halls to blocks of flats.

Last night a spokesman for industry body the Association of Payment and Clearing Services (APACS) admitted theft from the post was an issue.

She said the industry was liaising with Royal Mail to ensure security. She said: "There is a feeling there is a concerted effort among criminals to make a fast buck while they can." While banks believed the post remained the best way to deliver most cards, there were options where problems arose, she added. They could courier deliveries or arrange for a card to be picked up from a branch, she said.

Total card fraud rose by 18 per cent to £478.8 million last year. Fraud experts warned that the new chip and pin system would force criminals to look for new ways of carrying out fraud.

One said shoppers would have to be vigilant in guarding pin numbers. Once a criminal has a card and the pin number he can effectively "roam free" as a signature will not be required. On top of the burden of having to remember more pin numbers, there are warnings about always using the same combination of digits.

The APACS spokeswoman said: "Fraudsters will still be able to use the cards in the few places that take just the signature."