Guide to avoiding contactless card fraud

Contactless card payments are hugely popular within the UK – in fact, they've now overtaken chip and pin payments. Contactless payments increased 30% between June 2017 and June 2018 – and 52% of all shop payments were contactless in July 2018. Overall, there were 7.4bn contactless payments in 2018.

Around 7 in 10 payments in the UK are contactless, and 17% of 25 – 34-year-olds make only one monthly payments using cash – or rely entirely on cards to make payments.

One of the reasons for the increased popularity of using contactless cards is they're easy and simple to use to pay for a variety of goods. By removing the need for a PIN code, contactless cards do offer a fast and convenient way to pay - however, they may also offer criminals the opportunity to commit fraud.

Below, we look at the facts behind contactless cards, how fraudsters can take advantage and the best ways to avoid becoming of a victim of credit card fraud.

How do contactless cards work?

Contactless cards contain both a chip and an antenna that is used to carry out the transaction. When you hold your card on or near a card reader, the retailer's card reader sends out a signal which is picked up by your card's antenna. The chip inside your card contains information about your account and by using this information, the card reader can process its payment.

Payments are currently limited to a maximum of £30 (it was previously £20), and are typically used for small retail purchases. There can sometimes be a problem with “card clash” which is when two contactless cards, either payment cards or travel cards like Transport for London's Oyster Card, both interact with a card reader at the same time.

Contactless payments are also quicker because payments are processed in batches.

How widespread is contactless card fraud?

It may seem like contactless technology allows fraudsters an easy way to access your money without a PIN. Assuming you take precautions to protect your card, the chances of it happening to you are reduced – however, consumers are right to be vigilant as cases of contactless card fraud doubled in 2018.

Because contactless technology currently limits the value of purchases, the total potential value of fraud involving these cards is reduced. Thieves are always looking for big payouts, which are limited by contactless fraud.

However, there's also been recent research that shows that the £30 maximum spend on contactless cards can be bypassed. Researchers have found that the flaws in the payments system for some contactless cards could potentially allow criminals to steal hundreds of pounds in a single transaction.

The hack the researchers used to “break” the £30 limit uses a device which intercepts the signals between the card and the card reader. It then simultaneously ‘tells' the card that no verification is needed and the card reader that verification has been provided.

Another purported method that fraudsters use is to actually process payments by standing near someone on a train or in another crowded public place and reading their contactless card through their clothes. However, according to Which?, there's little evidences that this type of fraud is common.

How to avoid and report contactless card fraud

Contactless card fraud is on the rise; in the first half of 2018, thieves stole more than £8 million from contactless fraud.

You can minimise the chances of becoming a victim of contactless fraud by following these steps:

• Don't keep your cards in easily accessible pockets or bags which will draw pickpockets' attention
• Line your wallet or cardholder with tin foil to block scamming devices from reading your card. If you don't fancy the DIY approach, there are products like RFID readers available which do the same thing
• Don't let anyone take your card out of sight while taking a payment – even for just a few seconds. They could be using a skimming device to copy data from your card's magnetic strip
• Don't give your friends your card to make payments – always make sure you're there for all transactions
• Ask for a receipt to make sure you were charged the correct amount
• Keep a close eye on bank statements and your credit report to look for any unusual activity
• Report any lost or stolen cards as quickly as possible. There is a limit on how many times you can use a contactless card before requiring a PIN, which stops criminals from carrying out a large volume of small transactions of up to £30 each – however, it's best to not wait for the card to be blocked
• Report the fraud to ActionFraud