Fighting the identity fraudsters

By Jennifer Hill, Personal Finance Correspondent

LONDON (Reuters) - Fraud is at an all-time high: your identity is an increasingly valuable commodity. Proof of identity is needed to open bank accounts, obtain credit cards, loans and mortgages or claim benefits, and criminals are making a growing sum from pretending to be their unwitting victims.

An incidence of card fraud takes place, on average, every nine seconds in the UK, and losses on British plastic cards surged 25 percent to a record 535.2 million pounds last year, figures from APACS, the UK payments association, show.

That reversed a two-year decline and was largely driven by a 77 percent jump in fraud committed overseas by criminals using card details stolen here. This rose to 207.6 million pounds in 2007 from 117.1 million in 2006.

While the introduction of chip and PIN technology in Britain two years ago has helped cut face-to-face fraud committed on our high streets, criminals are finding new ways to defraud consumers.

Fraud abroad -- generally committed in countries that are yet to upgrade to chip and PIN -- now accounts for 39 percent of total British card fraud losses.

Counterfeit fraud -- driven by criminals stealing card details in the UK to make counterfeit magnetic strip cards for use overseas -- has increased 46 percent in the past year, while card-not-present fraud -- that committed over the phone, over the Internet or by mail order -- is up 37 percent.

As more countries upgrade to chip and PIN, the opportunities for criminals to use stolen magnetic strip details overseas should fall.

In the meantime, Britain's card industry is fighting back.