Phone text alerts to combat credit card fraud

Text message warnings could soon be sent to consumers who have had their credit cards stolen.

If any unusual transactions are made from an account, customers would immediately be sent the text alert by their credit card provider.

The system would enable companies to act more quickly to protect consumers who are unaware their card has been stolen, and to combat fraud. And if the customer is simply going on a spending spree of their own, they can let their bank know in order to prevent their credit card being barred.

The security scheme is being tested by Barclaycard, which provides credit cards to more than eight million British customers. It is trying to protect its customers from the spiralling problem of fraud, which is costing the economy more than £400 million a year.

Rather than send a letter through the post to warn of unusual spending, it has been sending text messages to more than 50,000 customers to test the response.

Barclaycard reports that the text-message alerts are prompting consumers to cancel their cards far more quickly than when a letter was sent through the post: usually within two hours of receiving the text message as opposed to two days when a warning was sent to them by post.

A Barclaycard spokesman said the trial was an important step towards beating card fraud. "We are trialling text alerts to customers if any potentially fraudulent activity is occurring on their account," he said.

"It is a question of all of us trying to stay one step ahead of the credit card criminals." But he added the firm did not yet know when the system would be introduced for all its customers.

The news comes a week before London hosts a conference on plastic card fraud. The problem of stolen or counterfeit credit cards has led to a 30 per cent increase in money lost to fraud between 2000 and 2001.

Although PIN numbers will replace signatures in credit transactions within the next few years, it is still unclear when and who will pay for the new equipment which will be able to accept hi-tech cards.

John McVitie, a specialist in credit card fraud prevention, said: "With fraudsters able to counterfeit cards so easily these days, it is very good to see a card issuer implement such a system as this and it is to be hoped that it is copied by others.

"The card industry must react much faster to make life difficult for the fraudster."

Barclaycard will also be asking customers to notify them if they are going on holiday. This will allow them to put a note on the customer's account so their card is not thought to be stolen when it is used abroad.

Royal Bank of Scotland said they would also like to hear from customers who intended to go abroad for some time or spend large sums of money over a short period.

"It might help us so that we do not think the card has been stolen and put a bar on it," a spokeswoman said.

The Home Office is expected to unveil a special police unit to tackle credit card fraud within the next few weeks. The team will work closely with banks in an attempt to eradicate the organised gangs which make millions from fake credit cards each year.