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Banks hide true level of card crime

Scotsman.com News - Banks hide true level of card crime

MURDO MACLEOD POLITICAL CORRESPONDENT

HALF a billion pounds stolen from bank and credit card accounts each year is not being reported to the police by financial institutions, a Scotland on Sunday investigation has found.

Banking industry sources have confirmed that any cyber-theft of less than £2,000 is not reported to outside authorities as a matter of policy. This means that at least half of the estimated £1bn pilfered from bank customers annually is being written off, fuelling fears that criminal gangs are being emboldened to steal even more.

MSPs and MPs have called for an inquiry into how widespread bank and credit card crime really is, amid concern that by not flagging up all incidents, the battle against fraud is being harmed.

Senior police officers have warned that Scotland has become the target of a new wave of organised crime gangs from eastern Europe, who believe that unwary Scots offer rich pickings and who target bank call-centre workers.

Officers also warn that thieves are acquiring new radio devices which can snoop on the signals from chip and pin card readers in restaurants and log them.

An informed insider in the banking industry said: "The figure for losses due to credit card and ID theft fraud is in the region of £1bn. That is about twice the amount which is typically reported, so about half is never flagged up to police."

The typical amount below which individual losses are not reported is £2,000, a figure cited by banking security analyst Paul Leckie, a partner in Unisys Global Financial Services, which provides security analysis to the industry.

An insider explained: "We would only report something under £2,000 if it were clear that it was a part of a much larger fraud. It may seem a lot to you, but for the bank it costs more in the time taken up by speaking to police and lawyers."

Police officially deny that they believe banks are failing to pass on information to them and praised the co-operation of financial institutions. But a number of police sources said that the lack of information prevented them getting a true picture of the scale of fraud.

Margaret Mitchell, the Scottish Tory justice spokeswoman, said: "Obviously the banks do work closely with the police on major cases and get results. But I think that if more smaller cases were flagged up then we would be able to fight against bigger fraudsters more effectively."

Nationalist MSP Stewart Stevenson, the deputy convener of Holyrood's Justice I Committee, said: "There should be an investigation into this. The question is whether we have the time to carry it out because we have so many bills to deal with. But this is a serious issue which needs to be looked into."

Scottish police say that gangs are increasingly targeting bank and call-centre staff to get confidential bank details from them, and "planting" moles within branches and centres.

In order to foil criminals such as these, who use bribery or threats to get workers to divulge information, banks are developing new software which can analyse suspicious transactions and also alert them to the activities of dishonest staff.

They are also developing sophisticated background checks, and some are even pondering scrapping staff uniforms to avoid targeting of employees after work.

February 12, 2006 at 01:27 PM in Financial Services | Permalink | TrackBack (7) | Top of page | Blog Home