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Contactless card fraud soars after limit raised to £100

contactless payment on beach
Contactless payments made up nearly four in 10 payments in the UK in 2022 - martin-dm/E+

Have you been a victim of contactless card fraud? Email money@telegraph.co.uk

Contactless card fraud has more than doubled since the payment limit was increased to £100 in 2021, figures show.

Consumers lost £41.5m to contactless card fraud last year, up from £34.9m in 2022 and £19.1m in 2021, according to a report from the banking industry body UK Finance.

Bank cards have become a bigger target of criminal gangs after the limit for contactless payments rose to £100 in October 2021, fraud experts said.

The contactless limit previously stood at £45 and £30 before that.

At the time the limit was increased, banks and industry bodies claimed that consumers were well protected.

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But gangs are able to steal cards from consumers using low-tech “distraction” methods or entrapment devices which can be attached to ATMs.

Ted Datta, a financial crime expert at compliance firm Moody’s, said: “A criminal will make a series of relatively small charges on an individual’s card that has been either cloned or stolen. The pandemic undoubtedly created new risks in this arena, with fraudsters exploiting the rise in contactless payments and limits by many banks.”

Use of contactless cards rose dramatically throughout the pandemic, when concerns about spreading Covid-19 meant that payment methods which reduced physical contact were seen as safer.

The popularity of contactless has continued to grow post-pandemic, making up nearly four in 10 payments in the UK in 2022.

Banks say the rise in contactless fraud is small relative to the growth in the use of contactless payments overall.

Jonathan Frost, a fraud consultant at Vox Veritas Vita, said that contactless fraud was largely the preserve of “opportunistic” criminals.

He added: “Increasingly the best option will be to steal a device.”

Lee Hopley, director of economic insight and research at UK Finance, said: “The amount of contactless fraud has risen, but the rate of increase has slowed. The amount of contactless fraud compared to what we spend on contactless cards remains well below that for unauthorised card fraud overall.”

The report also found that the total amount lost to all types of bank fraud in 2023 fell slightly to £1.2bn. Banks improving their security systems stopped £1.25bn of unauthorised fraud last year, but some £708.7m was still stolen from consumers.

So-called Authorised Push Payment, or “APP”, fraud – where scammers trick victims into sending them money – continues to be a major problem, with cases rising 12pc to 232,429.

The amount lost to these scams dropped by 5pc to £459.7m, however.

The numbers come ahead of new rules from the Payment Systems Regulator (PSR), due to come in from October, which will see all payment providers required to reimburse victims up to £415,000 for APP fraud.

Banks are fighting back against the plans and lobbying for the cap on payouts to be dramatically reduced.

Some 30 payment firms sent a letter to City minister Bim Afolami last week warning that the new rules could put them out of business and asking that the compensation limit be dropped to £30,000.

The fintechs and smaller payment providers, who are not publicly named, said that more responsibility should be placed on the shoulders of consumers to identify fraud and respond appropriately.

Ben Donaldson, managing director for economic crime at UK Finance said: “The financial services sector is working hard to be ready, but we do have some remaining concerns about the approach being taken by the PSR.

“Reimbursement will only ever be part of the solution as victims still suffer and the criminals still get the stolen money,” Mr Donaldson said.