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The number of travellers falling victim to credit-card fraud has soared in the past year, with the fraudulent use of UK-registered cards overseas leaping by 77%. Overseas losses from credit-and debit-card fraud totalled £208m in 2007, according to the credit-card industry’s trade body, Apacs, which says that criminal activity is highest in those countries that have yet to adopt chip-and-pin technology.

Gangs infiltrate shops, restaurants and ATMs, often recruiting staff to attach bugging devices - known as skimmers - to card-readers. As cards are swiped, the details encoded in their magnetic strips are recorded and used to manufacture counterfeits. These are then used in countries such as Morocco, Pakistan and the USA, where security measures are more easily circumvented.

“There’s clear evidence that chip-and-pin is driving down fraud in countries that have introduced the technology,” Apacs says. “Two years ago, France was the worst offender, but now the USA is number one, followed by Italy and Australia. As more and more countries adopt chip-and-pin, fraudsters are going to concentrate their efforts in countries that haven’t adopted the system.”

The Sunday Times has learnt, however, that chip-and-pin is perhaps not as foolproof as the banks insist.

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Source: TimesOnline, March 16th, 2008.