Banks accused of fraud risk by allowing Pin-less card payment

THREE bank card providers have been accused of putting customers at risk of fraud after it emerged that they are allowing shoppers to make payments without PINS.

An investigation by The Daily Telegraph found cardholders with Barclays, American Express and Co-op Bank are able to make payments with just a signature if they do not know their PIN. The three card providers have a total combined customer base of at least 16million people.

Customers of other banks will have their accounts frozen if they enter their PIN incorrectly three times.

Experts said that the increase in so-called “tap-andgo” payments means customers are becoming less familiar with Chip & PIN and often no longer remember their PIN.

Last night MPS and fraud groups raised concerns over the policies and suggested they were giving a “green light to fraud”.

Wes Streeting, Labour MP and Treasury committee member, said: “We are in a contactless era where staff in

shops don’t look at signatures on the back of cards any more. These banks ... are in danger of giving a green light to fraudsters.”

Gary Fitzgerald, chief executive at Action for Elderly Abuse, a helpline dealing with fraud cases, accused banks of “aiding fraud”. He said: “This is lunacy and not a safe approach at all.”

Currently contactless cards cap payments at £30 to protect customers from fraud, and require a PIN every 10th time someone taps to pay. But the move by Barclays and others means that if a debit card is stolen a thief could conceivably make a purchase above £30 without needing to know the PIN.

Last night Barclays said that it was trying to make payment more convenient for customers and insisted its fraud protection teams would be able to detect fraud and freeze accounts if it suspected payments were being made without the owners’ permission.

A Barclays spokesman said that the number of signature payments it is required to authorise was “minute”, adding: “We want to ensure that our customers always have access to their money and we have no higher priority than the protection of their funds.”

An American Express spokesman said: “We have the option to authorise a one-time approval of a low value transaction; however this is a risk-based decision that is subject to strict internal security processes.”

A Co-op Bank spokesman said it allowed chip and signature and magnetic stripe and signature payments after three unsuccessful PIN attempts, adding that such payments “are keenly tracked and monitored and some are restricted/rejected.” All three banks said they had always made it an option for customers to use signature in the event of three failed PIN attempts and that customers would be compensated in the event of fraud.

Other major card providers were contacted. Each has a policy of suspending customers’ accounts if three incorrect PIN attempts are made.