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Detailed insight into UK card fraud industry

The 3rd Man : 23 July, 2008  (Technical Article)
The 3rd Man and reveal the results of their study into the extent and nature of credit card fraud in the UK
The most comprehensive picture of card fraud in Britain is revealed today as experts in the fight against credit card crime reveal the true extent and nature of the problem facing innocent consumers and retailers. New research published by The 3rd Man and identifies where the major fraud hotspots are throughout the UK and reveals exactly how card criminals ply their trade.

Figures released in April this year already show that ‘card not present’ crime is far higher than official figures suggest. Supporting a BBC investigation the 3rd Man demonstrated that fraudulent credit card activity in the UK is over half a billion pounds, more than official statistics show.

Furthermore, users of’s customer ID check service have revealed that for every fraud that is reported, a further 8 attempted frauds go unreported and ignored by both law enforcement and the banks.

However, with fraudsters finding ever more sophisticated and cunning ways to steal our personal details, this latest research by the 3rd Man and show exactly where and how such fraud is perpetrated.

“Investigations like these continue to show that card crime is a major and growing threat to consumers and retailers,” says Andrew Goodwill, fraud expert and Director for the 3rd Man Group. “By pooling and sharing online retailers’ transaction data and their fraud experiences, we can see exactly how that trend is changing and continuing to grow. Fraudsters simply don’t give up.”

Fraudsters – they exist, but where do they ply their evil trade?

The 3rd Man’s analysis of card fraud hotspots reveals the following places to be the most densely populated areas of criminal activity on the Internet. London tops the league of fraudulent card transactions with South East London, and particularly Thamesmead (SE28), gaining notoriety as the place with the most fraudulent activity in the UK.

Based on an analysis of over 30 million ‘good’ and ‘bad’ card transactions over the past six months (January to June 2008), the findings focus on fraudulent activity by postcode. In the South East of London, for example, postcodes SE28, SE18, SE15, SE6 and SE17 house the worst offenders.

Outside of the capital, other hotspots in the top ten places include Manchester (5th) Romford (3rd) and Ilford (8th) in Essex, and Dartford (10th) in Kent. In the Midlands, Coventry (7th) is followed by Nottingham (9th).

Beyond the top ten places, Wales and Northern Ireland are the least fraudulent places in the UK with only Cardiff and Belfast recording notable levels of card fraud activity. In the South West of England, Exeter has the most fraudulent activity whilst in the North East Newcastle has the highest score. In Scotland, Aberdeen and Glasgow have relatively high incidents of fraud compared to other parts of the country.

Compared to the last analysis of postcode fraud carried out by Early Warning (which has since been acquired by the 3rd Man Group), places such as Liverpool and Kilmarnock have succeeded in reducing their levels of card fraud. “This is because local policing activity has targeted these criminals and it’s having a clear effect,” says Goodwill.

How do the fraudsters do it?.

As providers of customer ID check solutions to help retailers prevent fraud, has produced some research into the modus operandi of the fraudster. Based on interviews with convicted and unconvicted fraudsters, this research provides a useful insight into the who, the what, the when, the where and the why of card fraud.

The research can be downloaded at the 192business site and some of the more interesting findings are as follows:.

Fraudsters use a variety of methods to steal an identity when they commit fraud:.

“They work in bars where the pay’s rubbish and they get treated like idiots by the boss and the customers so its like Christmas for them when I come along and offer them a way to make shed loads of cash without any risk” George, Fraudster #B14, unconvicted.

“Chat rooms give me a way to spot potential victims. It takes a while to build up trust but that’s ok, its worth the effort in the end. As time goes on, people give out more and more stuff…I mean, to start with, I can be a man or a woman online. I use gender-free usernames like ‘Filmlover34’ so I can be whoever I need to be.” Michael, Fraudster #E5, unconvicted.

Fraudsters probe for the point of least defence and test to see which sites will let them get away with card fraud:

“You don’t always get lucky first, second or third time. As long as there’s a good supply of card details and rubbish websites, sooner or later you’re going to get a result. That makes the waiting more than worth it.”
Gavin, Fraudster #B17, convicted

“I carded $800 per order, but I try a first order of $100 or $150” Gavin, Fraudster #B17, convicted

Some fraudsters are brazen enough to use their own address to take delivery of goods whilst other fraudsters take more care:.

“I never stayed more than six months. Long enough to use and abuse the address and the credit of whoever lived there before me.” John, Fraudster #D8, convicted

“I park outside the house next door and either tinker with the engine or give it a wash. When the van turns up and the courier knocks at the door, I shout over “they’re out mate” and tell him that they work all day then I offer to take the parcel. It’s never failed yet. It means quite a bit of waiting round sometimes plus you have to move about a bit so that the couriers don’t recognise you but that’s a small price to pay.” Jonathan, Fraudster #C5

Fraudsters run fraud on a commercial scale and resell the goods on the black market:.

“The woman where I get the cards sells stuff on for me too but she takes a pretty big cut so I tend to use the others if I can.” Ben, Fraudster #C16, unconvicted

“People tell me what they want and I get it kiting the card. I charge between half and a third of the cost price.” Mary, Fraudster #D1, unconvicted

Director of, David Pope, adds: “We did this study to help the fraud managers using our customer ID check solutions to better understand how fraudsters work so they can prevent fraudsters from coming to their site. We work with ecommerce sites like Panasonic, Halfords and 24/7 Electrical to help them allow valid customers to transact whilst at the same time spotting card fraudsters and preventing card fraud. Fraudsters share information and work together so the fraud prevention industry should be doing the same.”

“The next major step forward is to ensure that people are found out and prosecuted. The fact is that card fraud, despite its enormous costs to business and the economy, is not taken as seriously as it should be. By exposing where fraudsters congregate and how exactly they deceive and steal, the police and other law enforcement authorities should be able to deal with the problem more effectively,” says Goodwill.

“We fully support the recent call by the House of Lords Science and Technology Committee for a change in the way card crime is reported. If you’ve been the victim of a card crime you should report it to the police as well informing your bank. It simply isn’t in the bank’s interest to report criminal activity to the police.”

“Until Government devotes more resource for each and every police force to tackle card fraud and gives each and every police force targets for card fraud arrests and prosecutions, then fraudsters will see card fraud as easy pickings. In fact, several (ex) fraudsters that I’ve met still perceive little risk in committing card fraud,” adds Pope.

“We shouldn’t lose sight of the fact that online and mail order shopping is a huge success and will continue to be so,” says Paul Simms, CEO of the 3rd Man. “However, we can all become more vigilant. Retailers need all the help they can get to prevent fraud from occurring. If it’s a problem for them, it’s a problem for all of us because costs get passed on. With the credit crunch biting hard and inflation at its highest for several years, that’s the last thing we need.”

The 3rd Man is a leading provider of fraud screening services which detect fraud patterns by comparing transactions from different retailers. specialises in aggregating databases against which leading ecommerce providers run customer identity checks.

The fraud prevention tools provided by both companies have become accepted as de facto processes for the ecommerce industry and will now be offered as an integrated service. Through their partnership, both companies provide a dual ID check and fraud screening solution available to retailers.
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