How fraudsters can use your contactless credit and debit cards AFTER you’ve cancelled them with the bank
Banks are unable to block contactless payments even after a card has been reported lost or stolen
THOUSANDS of people could be at risk of fraud if they have ever lost or had their contactless card stolen.
The warning comes after an investigation by MoneySavingExpert revealed a shocking security flaw which means that criminals can continue to use cards even after they have been reported as lost or stolen.
It was contacted by Justin Robson, a computer engineer from Cheshire, who found that his card was being used by fraudsters making contactless payments seven months after he reported it as stolen to his bank.
His debit and credit cards were stolen from the glove box of his BMW when it was snatched from outside his house in November last year.
The 42-year-old reported the theft to Halifax immediately and the bank said that they would cancel his cards and issue replacements.
RELATED STORIES
However, in late July he spotted payments that he hadn’t made coming out of his account.
In total there were five contactless purchases totalling nearly £30 made to a retailer more than 30 miles away in Stoke-on-Trent.
Justin contacted Halifax to report the fraud. He was told by the bank that fraudsters were using the stolen debit card that he had cancelled and that it might continue to happen for an unknown length of time.
Incredibly the bank advised him to keep an eye on his accounts because no one was sure if and when the card’s contactless function would stop working.
Contactless cards allow customers to make payments up to £30 without putting in their PIN.
Almost 10billion was spent using contactless cards between January and June this year, up from £7.74billion in the whole of 2015.
Halifax refunded Justin for the thefts and included a payment of £6 for the cost of the calls he made to the fraud team and £100 for distress and inconvenience.
A Halifax spokesperson said: "In the unlikely event that contactless transactions have been made on a cancelled lost or stolen card, we will always refund the customer in order to ensure they are not out of pocket."
Why can cards 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.
However, 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.
This means that if your contactless card is lost or stolen then it’s up to you to check your statement for fraudulent transactions.
What should you do if your card’s been lost or stolen?
Contact your bank or card provider as soon as you realise, so that they can cancel the card and issue a replacement.
Keep an eye on your account and scrutinise small contactless payments to make sure they are legit.
If you think your card has been used fraudulently then you should tell your bank or building society and report it to Action Fraud.
Have you ever been a victim of fraud? Tell us: [email protected]