Fool News: Card Fraudsters Still Beating The System

Fraudsters have discovered a new trick, using a 'Yescard.'

Here at The Fool, you might think that using a term such as foolproof would raise a few eyebrows. But for an increasing number of bank customers who have had sometimes thousands stolen from their accounts, the introduction of the "foolproof" Chip and PIN system has turned out to be anything but.

Through an emerging type of fraud in the UK, criminals are able to override a PIN by copying existing debit card details and overlaying a new PIN onto the cloned card, known as a "Yescard".

More prevalent on the continent, where Chip and PIN has been commonplace for several years, the name "Yescard" comes from the idea that the card is designed to accept any PIN code typed in by the user. "Yescard" fraud is starting to grow in the UK, as fraudsters continue to look for new loopholes in the system.

 Fraudsters are able to make withdrawals on any cash machine or device that is working offline, or not connected directly to your bank. These machines only verify transactions periodically to minimise costs as there is a charge for every verification or a slight time delay with the bank's database.

The result is that when banks check their records, both the correct card and PIN appear to have been used in the transaction.

As a result, some disgruntled but honest customers are being left empty handed by their banks as they are being  told that they have either carried out the transaction themselves or are accused of being negligent with their PIN.

There are also several other ways that criminals can get hold of customer details, including shoulder surfing at ATMs, phishing and searching through refuse for sensitive data.

Of course, `Yescards' aren't the only bank fraud out there. Some fraudsters are stealing identities by scrabbling through bins, others are stealing cards, chequebooks and lots more.  And there is some good news on that.

As part of National Identity Fraud Prevention week, Experian has released figures showing that overall bank fraud was down during the first half of 2007, although card ID theft and counterfeiting were up 37% on the year before.  In addition, 2,570 victims of identity fraud contacted Experian for fraud assistance, representing a 68% year-on-year increase in identity fraud activity reported to Experian.

Experian operates The Fool's credit report service. You can find out more about your credit status with a free credit report!