Criminal gangs cloning the credit and debit card details of thousands of shoppers fuelled a 14 per cent rise in fraud this year, figures have revealed.
The total amount lost to the fraudsters reached a record Å301.7million in the first half of the year - more than before chip and pin security was introduced in 2006.
Some Å121.2million - or 40 per cent of the total - involved fraud committed on cloned or stolen UK cards using cash machines abroad, a 190 per cent rise in just three years.
The data by the Association of Payment Clearing Services - the banking industry's trade body - also revealed a 185 per cent surge in online banking fraud to Å21.4million.
The figures are evidence that criminals are finding increasingly elaborate ways to steal customers' identities, passwords and log-in details.
Some gangs are planting computer viruses on home PCs or using wireless internet connections to capture personal details remotely.
But others are using chip and pin security - meant to deliver a hammer blow to the fraudsters - to steal thousands from shoppers' accounts.
Experts have warned that because customers typically use their four-digit PIN several times a day, the technology has actually given gangs greater opportunities to steal personal details. While card fraud fell from Å219.5million in 2005 to Å209million in the first half of 2006 following the start of chip and pin, it rose to Å263.6million in 2007.
Although the banking industry insisted last night that card fraud would have continued to rise sharply if chip and pin had not been introduced, in reality it has provided only a temporary halt, with fraudsters finding new - and more lucrative - ways to operate.
Last month, police warned that many gangs have installed fake chip and PIN readers in small shops and petrol stations to record the information on a credit card's magnetic stripe.
A security camera then notes the customer's PIN before the card is cloned and used at a cashpoint, usually abroad.
Police suspect the money raised is not only fuelling the activities of international criminal gangs involved in drug running and prostitution, but also terrorism.
It has also been claimed that the money may even have been used by Sri Lankan gangs to finance the violent activities of the Tamil Tigers.
However, Sandra Quinn, of APACS, insisted yesterday: 'Criminals continue to target those areas where we do not currently have the security benefits of chip and pin, causing increases in fraud abroad and phone, internet and mail order shopping fraud.
'Fraud abroad will be more difficult for criminals to commit as more countries roll-out chip and pin.
'To help tackle online fraud, we urge shoppers to protect their computer with anti-virus software, only use secure websites and use systems that make cards more secure when shopping online.'