credit cards 4u - What do I do if my bank card is stolen or used illegally?

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What do I do if my bank card is stolen or used illegally?

Fraud on UK credit and debit cards costs over £1 million every day, and you would hope never to become part of that statistic.

But if you do, all is not lost.

To fight back against card criminals, UK banks are introducing a system in which all cardholders will use a PIN (personal identification number) in conjunction with a highly secure chip card. This system is scheduled to be fully implemented by 2005 and is expected to halve predicted fraud losses.

Until then, if your card is used or stolen you are fully protected by the UK Banking Code. The Code is a voluntary system that sets out standards for good banking practice, including limiting liability for cardholders that are victims of fraud. Under the Code, if someone else uses your card before you tell your card issuer it has been lost or stolen or that someone else knows your PIN, the most you will have to pay, in theory, is £50.

In practice the bank or building society will usually refund the full amount lost. But if the cardholder were negligent, for example, by keeping their PIN near their card, they would have to meet all the losses.

If your card is used fraudulently but you still have the card in your possession you will not be liable to pay for any part of the losses. You would probably still have your card in your possession if you are a victim of counterfeit skimming or card-not-present fraud.

Taking care of your cards, chequebooks and PINs is essential to help prevent fraud and protect your accounts. If you notice any unrecognised transactions on your statement, or if your card is missing, report it to your card issuer immediately.

To help protect yourself from becoming a victim of card fraud, Card Watch recommends you follow these helpful tips:

Guard your card
Don't let it out of your sight when making a transaction.
Carefully discard receipts from card transactions and other personal information (shred them if possible to prevent 'bin divers' from acquiring information about you and your cards)
Check your statements carefully. If you find an unfamiliar transaction contact your card issuer immediately.
Never write down your PIN and never disclose it to anyone, even if they claim to be from your card issuer or the police.
When using a cash machine, be wary of anyone who might be trying to watch you enter your PIN and do not allow yourself to be distracted by anyone trying to talk to you.

Counterfeit fraud
Counterfeit is the biggest and fastest growing type of card fraud. Most cases involve skimming, a process where the genuine data on a card's magnetic stripe is electronically copied onto another, without the legitimate cardholder's knowledge.

Skimming normally occurs at retail outlets - particularly bars, restaurants and petrol stations - where a corrupt employee skims a customer's card before handing it back, then sells the information on higher up the criminal ladder where counterfeit cards are made. In other cases, the details obtained by skimming are used to carry out fraudulent card-not-present transactions. Often the cardholder is unaware of the fraud until a statement arrives showing purchases they did not make.

The highly secure chip cards now being introduced in the UK will in time wipe out skimming.

In the meantime, cardholders should always keep their card in sight when making a transaction.

Card-not-present fraud
Card-not-present fraud occurs when neither the card nor its holder is present at the point-of-sale, as happens in telephone, fax, mail order and internet transactions.

This crime involves using fraudulently obtained card details to make a purchase. Usually the details are taken from discarded receipts or copied down without the cardholder's knowledge. As with counterfeit fraud, the legitimate cardholder may not be aware of the fraud until a statement is received.

The UK card industry has made available to merchants, an address and card security code checking system, to fight this type of fraud.

Discard receipts carefully - shredding them if possible.

Usefull links

BBCi Crime Prevention Advice:
Further advice on how to avoid getting your credit or bank card stolen or used fraudulently.

Cardwatch:
Advice and information for all credit and bank card users.

The UK Banking Code:
More information on how your bank can help you recover money lost from credit card fraud.