Using the information that they have come across on people’s Facebook pages, fraudsters are able to open bank accounts and take out credit cards and personal loans in their victim’s name.

The warning was sounded by a BBC1 consumer show Watchdog. The show conducted an experiment in which they set up a fictional identity on Facebook. The Watchdog team then invited 100 random people to become friends with their newly created fictional character ‘Amba’.

35 of those invited to become Amba’s friend immediately accepted the request despite knowing nothing about her. By accepting, the victims allowed the fictional Watchdog character to view any private details that they had posted on their page.

Details which could easily be accessed included date of birth as well as hometown. The Watchdog team then used these details in order to obtain more private details about their victims from other publicly available websites.

With this information Watchdog then opened up an online bank account in their victims’ names as well as successfully applying for credit cards.

One of the victims, Scott Gould, stated that he was “very surprised” by what Watchdog managed to do despite having only the slightest bits of information about him.

Users of Facebook as well as all other social networking sights are advised to be very careful when posting their details. Fraudsters often leave a trail of bad debts behind them, in Your name. Not only is the onus on you to prove that you are not responsible, it is hard work correcting your damaged credit rating.

Many cash withdrawals are being carried out using cards that do not have a security chip and the shocking thing is that it is the banks themselves that are allowing this to happen.

This is how it works. Currently there are roughly 140m cards in circulation in the UK and every day an average of 7m withdrawals are made from UK cash machines. Now it is only to be expected that some of these cards will be slightly faulty therefore if banks were to reject cards with a slight fault they would then be inundated with complaints from angry customers who could not withdraw their own money.

This has left the door open to fraudsters who can use cloned bank cards that do not come with a chip to get their hands on other peoples’ cash. This leaves bank claims that the system is foolproof as completely false.

The banking industry trade association for payments has admitted that an undisclosed number of the UK’s 60,500 cash machines will allow cloned cards to withdraw money provided the cloned card is used with the correct pin number.

Because bank customers are not protected from fraud in the way that credit card holders are, account holders could find themselves fleeced of their entire balance with no redress. Not only are people finding themselves without the money to meet their home loan repayments or rent, they are going into unauthorised overdrafts and forced to borrow money to cover the shortfall.

If you fail to cancel your cards once you stop using them you may end up forgetting that you ever had them.  Often if your account has no activity you will most likely end up not receiving a statement to remind you of the account.  So if someone gets a hold of your information and changes the billing address, you will easily miss that and fall victim to identity fraud.  Once someone has your details they can easily go further and take out expensive personal loans or even mortgages in your name. Typically these fraudsters will very quickly default on payments, leaving the black marks on your credit record. Often the first you will know of the matter is when you yourself are turned down for loans or mortgages.

One way of protecting yourself is by checking your credit report, and if you find in-active accounts listed on your report, then you should close them the ensure you do not end up a victim of fraud.

The new system will apply to items under £10 and will ‘see’ the cards being charged by waving them in front of a reader. This is similar to systems already used for Oyster cards in London. It is also used for automobile fuel purchases in the USA and Canada.

The ‘wave and pay’ scheme will be introduced to select businesses in the capital this September.  A  nationwide release will take place in 2008.

“I am pleased that the industry has united on standards for cards and terminals that will provide a highly convenient and quick way to pay for low value items,” commented Visa UK managing director Jose San Juan.

“By the autumn the first UK cardholders will be buying a coffee or a sandwich in a split second, and retailers will enjoy quicker transactions, the security of the payment guarantee and an end to the high costs associated with handling cash,” he added.

Fool.co.uk warned that the convenience of such systems could lead to consumers increasing their spending on unnecessary items, purely out of convenience.

It has also increased concerns from other consumer groups about theft and fraud.  With no signing needed, and no identification, a consumer could swipe the card without any consumer protection system in place, especially as the limits will, undoubtedly, increase. With personal debt rising to record levels, debt experts are rightly concerned that swiping a debit or credit card with no pause for thought could increase the need for debt consolidation loans for shoppers who go on a spending frenzy.

The device is the size of a calculator and is relatively easy to use, as you simply insert your debit card into the hand-sized device.  Once the card is inserted you then enter your unique eight-digit pin number into the bank’s website.  The reader will generate a new number every time you insert your debit card, which you then use to access your online bank account.  Because the device can generate up to nine million random numbers it makes it extremely difficult for fraudsters to access the online account.

Some of the first customers to be given these hand-held card readers are those customers who already have active online bank accounts. Barclays Bank has the biggest programme, with up to two million online users.  They will start to send out the devices to 500,000 online customers starting in July.  Other big banks, such as the Royal Bank of Scotland and NatWest will start issuing the devices this week to thousands of their online customers.  Other banks, such as Halifax and Nationwide, intend to issue similar devices later this year.

It is hoped that these devices will not only beat fraud but also facilitate customers in managing their money. Customers will be able to act fast if they see that they have gone overdrawn and eventually clients may be able to apply for credit or other bank services online.

However, the report continues to state that the true figures may be significantly higher than their report’s claims.

The report is the result of the year-long study that was presented to MPs and the attorney general Lord Goldsmith today, Mike Bowron, commissioner of police for the City of London.

Mr Bowron said:  “. . . figure excludes some major areas of criminality, such as income tax and EU fraud, where statistics are simply not available”.

The police commissioner said that if today’s report included the missing estimates the total fraud costs would exceed £20 billion.

”To put this figure into perspective, such losses would pay for an additional 200,000 police officers or save every man, woman and child £330 per year,” he said.

“It used to be said ‘No one walks down the street in fear of being embezzled.’ Well increasingly they do. Whereas once the average Briton dreaded being burgled or having their car broken into, they are now worried about identity fraud, mass marketing scams and other forms of financial crime that have a serious impact on our lives.

“Long gone is the notion that fraud is a victimless crime,” Mr Bowron concluded.

Many victims of fraud are tricked by con-artists into giving them money.  Others fall victim to identity theft. Both types of fraud can result in the victim losing thousands before they finally see the problem and take action.

You should always have copies and emergency information for all your credit cards on file.  By making copies of your credit cards, and writing down the emergency contact numbers for each card, it will make it easier to contact your credit card company when your card is stolen.  The moment you realise your card has been stolen or misused, you need to call your card issuer immediately to cancel your card and by having the contact numbers on file you will be able to cancel the card quickly.

The moment you realise that your card has been stolen you should immediately phone the police as well as your credit card company.  As time consuming and inconvenient as calling the policy may seem, it is necessary if you would like your card issuers to refund any unauthorised uses of the card.

You should always familiarise yourself with the credit card issuer’s procedures if ever your card is stolen while you are travelling abroad.  You should know if your card issuer will arrange emergency cash advances, or if the company will replace your card immediately.  Whenever you sign up with a credit card company you will want to consider what protection plan you wish to have.