The Logic Group Blog

The new Annual Fraud Indicator from the National Fraud Authority (NFA) was published this morning and makes some interesting reading.

The headline figure which everyone will pick up on is that the loss to the UK economy to fraud each year is estimated to be £73Bn. Considering the previous estimate in 2011 was £38Bn has fraud really increased two fold? The answer, unsurprisingly, is that it hasn’t; what has changed is the inclusion of new areas of the economy not previously considered in the scope and a step change in the methodology in place.

So what are the interesting facts in the report?

The devil is in the details - an old adage I know, but just the other day I was struck by how accurate that phrase can be. In an online daily news service for Payments professionals there were 2 very different headlines on consecutive days. On day 1 the headline read “UK: Fraud reaches record levels in 2011”, followed the next day by “UK: Fraud losses on debit and credit cards reach the lowest level in 10 years”

How should a Retailer or other merchant respond to headlines like that? Should they increase investment in anti-fraud measures or re-allocate some of that spend to driving new marketing programmes as the risk of fraud is reduced? A more detailed investigation is required – I took a close look at each report, rather than relying on the headlines.
My first observation is that the reports were from two different sources and were talking about different sets of statistics. The “fraud is getting worse” one was from CIFAS, the UK’s Fraud Prevention Service, covering all fraud reported to the National Fraud Database, and the “fraud is reducing” one was from The UK Cards Association covering debit and credit card fraud only. So is that the reason? Well, no it isn’t.  The CIFAS report states that plastic card fraud has increased by 6.3% from 2010 to 2011 whereas the UK Cards Association says the overall rate has decreased by 7%.

Irrational Fears
Have you ever had an irrational fear?  I've had quite a few in my time, but today I'll confess to one involving car windows.  When I had older cars with manually operated windows I had a phobia of cars with electric windows.  My fear was that if I drove one of these new-fangled electric windows cars, I'd have an accident on a bridge or along a body of water, my car would break through the safety barriers and would plunge into the dark icy waters.  I'd try in vain to open the door, but deformation from the crash would make that impossible.  The waters would flood the car electrics also stopping the electric windows from functioning.  So, as I sit in the rapidly filling car I would curse the day I stopped using cars with manual windows.  You'll be pleased to know that I did get over my irrational fear it's now over 5 years since I began using cars with electric windows and I'm still here.

It's security stupid

When I look at the recent hoo-ha surrounding the security vulnerabilities discovered in Google Wallet it makes me think that others might too be suffering from an irrational fear.