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18/01/09

Legitimate card transactions could be queried or cancelled

In the face of rising debit and credit card fraud, one leading bank is rolling out new technology that means every customer transaction will be scrutinised for fraud. HSBC is introducing the programme which will affect 10 million bank cards, but there is a warning from the banking sector that more checks will mean even legitimate transactions could be queried and even cancelled.

Card fraud is booming. The arrival of Chip & Pin saw a fall in fraud levels, but it's rising sharply once again. In the first six months of last year, card fraud was up 14% to over 300 million, but the banks are fighting back.

HSBC is introducing a new programme which means it will check every single transaction to see if it could be fraudulent. That's 10 million cards and millions of transactions.

In an interview with BBC News, Bart Patrick of SAS Financial security software said: "When you put your card in the machine, it's carrying out an automatic check against your pattern of normal use and making a decision as to whether that transaction is actually a real and not a fraudulent transaction."

The downside of this active screening is you might get stopped when you're making a legitimate transaction. That happened to Sally Wiber when she went on holiday to Borneo. She followed industry advice and told her bank where she was going, but that didn't stop her credit and debit cards being blocked when she tried to use them on her first day.

Sally Wiber told the BBC: "And I really spent the first day of my holiday dealing with the bank, running around finding internet then having to get through to people and then having quite a frustrating conversation on the phone to make sure that they would let me continue to use my credit card for the rest of my holiday."

But the banking industry says in the fight against fraud, you might have to accept some inconvenience.

Mark Bowerman, APACS, UK payments association: "We have to expect that, from time to time, we may be in a shop and find that our card has been stopped or the transaction declined because of these systems. These systems are there to protect us as customers to stop our cards from being used fraudulently so if that's the price we have to pay then I think people should be prepared to pay that price."

So when are you most at risk of having your card declined? Well if you spend a large sum of money or use your card far more frequently than normal, that could raise alarms. But with fraud abroad now accounting for 40% of all card crime, it's when you are outside the UK that your card use is most likely to be queried. So the advice is you can't rely on your card and that you should pack plenty of cash as well.

Sean Tipton, Association of British Travel Agents: "Take a range of payment methods. Firstly, take some cash for immediate expenses, do take one or two credit cards preferably with different banks and also take Travellers Cheques as well for that extra security if things go disastrously wrong."

HSBC says most of the time when it blocks a card incorrectly it's sorted out very quickly but that it does acknowledge there are times when a customer may not have access to a phone when it's more difficult and when it can lead to real problems. But as the fight against fraud intensifies, you can't assume that you can rely on your card.