Contactless cards pose major fraud risk

Holders of contactless payment cards are complaining that fraudsters have been able to siphon money from their accounts.

The thieves appear to be managing to access the information on the cards and then use it to make purchases online.

In the latest case, one Wolverhampton man was shocked to receive the message 'insufficient funds' when trying to withdraw some cash: he'd been paid just a couple of days before.

But, he tells the Mirror, his bank told him that £2,125 of purchases had been made online over the last three days using his card.

Contactless technology allows customers to make purchases of up to £30 by simply holding their card close to the payment terminal. A built-in chip transmits the card data over short distances.

There are currently as many as 76 million contactless cards in the UK, according to the UK Card Association, with more than 120 million transactions being made per month.

However, it appears that the Wolverhampton fraudsters were able to access the data without arousing suspicion, enabling them to go on a shopping spree.
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In October, the same technique was used to raid the bank account of Roi Perez - who happens to work for SC Magazine, aimed at IT security specialists. Mr Perez was quick on the uptake when a man bumped into him on the tube in a rather unnatural manner, and promptly called his bank. He was told that, yes, someone had stolen £20 from his account.

Earlier this year, Which? tested six debit cards and four credit cards, and found that they all revealed some data. And because that data was used to shop online, rather than through the contactless system, the limit of £30 per transaction doesn't apply.

The authorities in Hong Kong and New Zealand have recently warned banking customers to beware. Here, as there, some people are attempting to shield their cards by lining their wallets with tin foil, while others are buying special 'RFID protector' wallets.

The banks say they're happy to reimburse anybody that's the victim of fraud, but claim that the system is actually less risky than chip-and-pin. Total card fraud fell 2% last year, according to official figures, with losses due to contactless fraud amounting to less than 1p per £100.