Money Insider: Don't fall for this phoney call card scam

A shocking new report from the UK Cards Association last week revealed that criminal gangs are increasingly targeting elderly and vulnerable bank customers with a new scam involving debit and credit cards.

It starts with a person being called by a criminal posing as someone from their bank, or even the police.

The caller tells the victim that their credit or debit card needs collecting and replacing, following fraud on their account. The caller then gets the victim to hang up and phone their bank for confirmation.

However, the criminal stays on the line, tricking the victim into believing they are on a new call and their bank is at the end of the line.

The criminal then asks the person to divulge their PIN or asks them to key it into their telephone keypad, before sending a courier to their home to collect the card. The victim is told that the card is going to the bank, but of course it ends up in the hands of the fraudster along with the PIN obtained during the call.

Figures released by Financial Fraud Action UK and the UK Cards Association show that this particular con has already resulted in more than £7.5m worth of fraud on credit and debit cards in the first eight months of this year. Over that time, more than 1,600 bank customers have fallen victim, with average losses per case amounting to almost £4,200.

Police are warning of a spike in reported cases, with intelligence showing that the estimated amount stolen through this method so far this year is already 10 times the amount stolen during the whole of 2011.

The deception, undertaken by criminal gangs, tends to target elderly bank customers, with fraud intelligence showing that the average age of victims is 69. Hot spots for this crime include London, Surrey and Strathclyde.

If you've got elderly neighbours, friends or relatives, take five minutes to help prevent them becoming one of the next victims.

Spreading the word will not only cut the number of successful scams, but more importantly will also reduce the unnecessary stress and misery that this type of deception causes.

If customers are victims of fraud, they will not suffer any financial loss, but by following these three steps, they can prevent becoming a victim in the first place:

* Your bank or the police will never ring you to tell you they are coming to your home to pick up your card. Never hand it over to anyone who comes to collect it.

* Your bank will never ask you to authorise anything by entering your PIN into the telephone. Never share your PIN with anyone – the only times you should use your PIN are at a cash machine or when you use a shop's chip-and-PIN machine.

* Always speak to the bank securely. Before calling your bank, make sure you can hear the dial tone. Only call your bank on an advertised number.

Will peer-to-peer customers benefit from new regulation?

It was announced last week that the new market regulator, the Financial Conduct Authority, will oversee the borrowing and lending activities of peer-to-peer (P2P) providers from 2014.

In the main it's good news for the established and increasingly popular P2P companies, as it will give the sector additional credibility. Consumers should also take confidence from the fact that the industry is being taken seriously by government.

There's no doubt the regulator will look closely at the way the P2P providers mitigate the risk for their customers (as there is no Financial Services Compensation Scheme protection) and this should be a positive step for providers and consumers alike.

The main downside of this move is that the Government gets the regulation wrong and creates too much of a cost burden that dulls the P2P edge over the banks.

If you look at the rate of return you can get from the likes of RateSetter, Zopa and Funding Circle, it is in a different league compared to the dismal interest rates from mainstream banks.

Let's hope for the sake of UK savers and small businesses that the regulatory costs don't have a negative impact on P2P's current competitive pricing.

Andrew Hagger is an independent personal finance analyst at moneycomms.co.uk