Contactless cards can still be used AFTER they’ve been reported lost or stolen – and millions are still at risk
The chairman of watchdog the Financial Conduct Authority admitted to a group of MPs that the problem hadn't been fully solved
A FLAW with contactless cards which lets fraudsters use them AFTER they've been cancelled has still not been fully fixed 18 months after it was first discovered.
An investigation carried out by Martin Lewis' MoneySavingExpert in 2016 revealed that crooks can sometimes still use the cards after they've been stopped due to the way some transactions are processed.
Last year, the financial watchdog, the Financial Conduct Authority (FCA) agreed to try and put a stop to the problem and make sure that consumers who have cash stolen from them in this way are refunded.
But speaking at a Treasury Committee meeting, chairman John Griffith-Jones admitted that while steps had been taken the issue hadn't yet been fully sorted, potentially leaving Brits at risk of being defrauded.
There are more than 108million contactless cards in use in the UK, meaning millions of cards could be vulnerable if they're lost or stolen.
MSE's investigation found that 16 major banks and building societies cards' can all be used after they've been cancelled, but there were differences in how they dealt with payments on cancelled cards.
The vast majority including Lloyds, HSBC, Nationwide, and Halifax don't check with a customer if a purchase made on their card was actually done by them.
Cancelled contactless card fraud can occur due to the way retailers may process a transaction, either in "online" or "offline" mode.
If it's processed online, the payment machine immediately contacts the customer's bank to make sure there is enough funds in their account - and if the card has been cancelled the payment won't go through.
But some shops will process payments "offline" which means they store up a batch to put through later, normally within 24 hours and don't immediately contact the bank - meaning potential crooks could use the cancelled card undetected.
Mr Griffith-Jones told the group of MPs that the level of overall contactless card fraud cost consumers about £7million in 2016.
He said that while the banks and card providers like Visa had begun putting more payments online, offline payments were still a "weakness in the system."
He said: "Broadly speaking the more online transactions there are, the less fraud is possible and we're moving, we think satisfactorily in that direction."
Money scams and fraud are becoming an increasingly big concern.
Figures released this week by UK Finance show that an eye-watering £366million was lost in the first half of 2017, with a further £101million lost through bank transfer scams.
To help tackle the problem, those who are scammed via bank transfer could find it easier to get their money back under new plans that could be introduced this year.
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Currently Brits have no legal right to get their money back from their bank if they are duped into transferring their money to a crook.
Last week, The Sun Online reported that more than 1,500 Brits said they had lost money because of Facebook scams - with the average victim losing £342.
The Sun Online has contacted the FCA about Mr Grffith-Jones comments.
WHY CAN CARDS STILL BE USED AFTER THEY HAVE BEEN CANCELLED?
IF you report a card as lost or stolen then it can’t be used for a standard chip and PIN transaction.
When you use a contactless card a retailer may process the payment in either “online” or “offline” mode.
If a payment is processed online then the card and payment machine communicate with the customer’s bank to check for sufficient funds in the account.
If the card has been reported as lost or stolen then it will be flagged and the payment won’t go through.
But some retailers will process payments offline – which means they store up a batch to process later, usually within 24 hours.
Shops can do this because of the low value of contactless payments. There is a limit of £30 per transaction.
This means that thieves can use the card undetected. Not all banks will investigate contactless payments made on cancelled cards.
Fraudsters can still be caught out if they are required to use the PIN to verify the transaction.
The rules for each bank varies. Some will stop transactions from going through, while others will check with a customer if they think there may be a problem.
At the moment it means that if your contactless card is lost or stolen then it’s up to you to check your statement for fraudulent transactions.
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