The number of overall complaints to the financial watchdog increased by 25% last year, with more than 250,000 cases being dealt with.

Complaints over payment protection insurance were top of the list of cases for the FOS, as more and more people tried to claim back money following the high-profile court case last year.

The FOS said it received around 130,000 complaints about payment protection insurance (PPI) last year – the biggest single category of complaints ever received.

But credit cards came second in the list, as the collapse of retailers and budget airlines has seen customers attempting to claim back money.

“The pain of the recession has begun to bite deeply, and this is showing up in our figures,” said Martyn James, a spokesman for the FOS.

There was a 10% rise in the number of credit card complaints to the ombudsman last year, amounting to more than 19,000 cases.

This is the largest number since records began, and pushed credit cards past current accounts as the second-biggest complaint area.

The main reason for the surge is customers claiming refunds with their credit card companies after the collapse of a retailer or travel agency.

Customers can use Section 75 of the Consumer Credit Act, which states that credit card companies are liable if there is something wrong with goods or services paid for with plastic.

More customers are aware of Section 75, but the FOS has said that more credit card companies are making it harder to claim a refund.

“A common misconception is that the customer must first exhaust all other channels of complaint,” added Mr James.

“This is not the case, and issuers have no right to tell consumers to pursue the retailer first. Once asked for a refund, they have a legal liability to respond.”

With the economic downturn continuing to squeeze people’s finances, the FOS is urging customers to know where they stand with their rights.

Natalie Ceeney, chief ombudsman at the FOS stated “as more people are tightening their belts in these difficult financial times, it’s more important than ever that people know their rights if you use credit and something goes wrong.”

“So if you have a complaint and you’re not sure where to turn, speak to the ombudsman,” she added.

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The Financial Ombudsman Service, the independent watchdog for the finance industry, has said it handles as many as 100 complaints per week from customers who’ve been effectively ignored by their credit card company.

Credit card customers should be protected by Section 75 of the Consumer Credit Act, which is designed to protect card users financially.

Section 75 was once a little-known regulation. But as people’s credit card usage has increased over the years, so has knowledge of its benefits.

“It’s more important than ever that people know their rights if you use credit and something goes wrong,” said Chief Ombudsman Natalie Ceeney.

In the last five years in particular, the use of Section 75 has shot up. But where credit card companies would once payout without question, evidence shows that more and more are taking a stricter line when it comes to refunds.

Many customers have complained of receiving a standard letter from bank staff rejecting their claim outright, while the Financial Ombudsman Service has seen a spike in complaints in the last few years.

Section 75 states that if a consumer pays for something using their credit card, the credit card company is liable if something goes wrong with the purchase.

This can be anything from faulty goods, to the company selling you the goods going out of business. To claim on Section 75, the consumer must have spent a minimum of £100 and a maximum of £30,000.

“Credit cards offer a greater level of protection to consumers than payment by cash or cheques – meaning that purchases can be made with much greater confidence,” said Craig Jones, spokesperson for the UK Cards Association.

The law can be very useful to shoppers and card users, as it prevents them for paying off a debt on something that they either did not receive or was faulty.

Customers are now being urged to know when Section 75 applies, as it does not protect you should you change your mind about a purchase.

“Section 75 gives you great and unique protection,” said Doriena Koldenhof, of the UK Cards Association, the trade body for banks, says:

“But the law in this area can be complex and each claim has to be assessed on a case-by-case basis,” she added.

An alternative to credit cards is a prepaid card. These offer many of the benefits as a credit card, but with added fraud security as they are not tied to a bank account.

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Analysis of more than 100 million credit card applications in the first three months of last year, by risk management firm ID Analytics, has revealed that credit card fraudsters are using the deceased’s details to establish accounts.

It was found that as many as 2.5 million deceased Americans have had their identities stolen by criminals, including names, dates of birth and Social Security Numbers.

The research compared the data from more than 100 million credit card applications with data from the US database of deceased people – called the Death Master File.

The comparison found that in most cases the use of the deceased’s personal information was used by criminals by mistake.

Around 1.6 million of the fraudulent applications were found to be mistakes made by identity thieves when entering Social Security Numbers.

In addition, the research found that in some cases thieves make up the names, Social Security Numbers and birthdays which coincidently match the information of the deceased.

However, in many cases the use of this information was intentional. It was found that in around 800,000 cases identity thieves were intentionally tapping the Death Master File for information to use on credit card applications.

“This study brings to light a significant problem as we see fraudsters intentionally using identities of the deceased at the rate of more than 2,000 per day,” said Dr. Stephen Coggeshall, chief technology officer at ID Analytics.

“While this is clearly a problem for businesses, surviving family members can also be the victims of this identity fraud as they are left to manage the estates of their deceased loved ones.”

So it appears that anyone can be the victim of credit card fraud, alive or dead. It is a problem that is seen not just in America, but in the UK too.

There are a number of steps you can take to reduce the risk of credit card fraud. These include keeping a close eye on your credit card use, checking your statement regularly, and alerting your card provider immediately should you lose your card.

Another way to avoid becoming the victim of fraud is to invest in a prepaid credit card. These work in the same way as a credit card, with much of the same benefits, but offer much more security.

Prepaid cards are not tied to a bank account, and have a pre-loaded amount on them, so are a lot harder for criminals to target.

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A shift in the focus of cybercriminals has been detected recently, as they target systems that store details of a higher number of credit cards rather than personal online bank accounts.

The latest attack is aimed at the point-of-sale (PoS) systems in hotels, as hotels generally have a limited knowledge of IT and malware, but handle a large number of credit cards on a daily basis.

The latest malware is a remote access Trojan horse (RAT), which is designed to steal customer credit card and billing information from hotel front desk computers.

The malware was discovered by researchers at security firm Trusteer, and was on the black market for $ 280, or £175.

The RAT has the ability to take screenshots, upload and download files to and from the infected computer, and record keystrokes – making them suitable for a number of operations.

“The strength of RATs is their generic nature – they can be used to attack many different applications in use by many industries,” said Amit Klein, Trusteer’s chief technology officer.

“We’ve seen RATs used against internal applications, banking applications, defence industries,” he added.

The RAT discovered by Trusteer came with an algorithm to prevent it being detected by any antivirus software, meaning it can be delivered to a buyer via email or instant messaging without being detected.

In addition, the malware package also came with instructions on how to trick hotel managers into installing it on a front desk computer.

Trusteer has said that the malware’s focus on hotel PoS systems is typical of cybercriminals these days, who are looking for more lucrative targets than personal bank accounts or consumer machines.

“I think the main reason for this shift, or diversification, is the fact that PoS machines, and some business machines serve as ‘mini repositories’ where information about many victims can be collected at once,” said Mr Klein.

“This is in contrast with consumer machines which typically expose one or two accounts,” he added.

The news is worrying for credit card customers, as there is no way of detecting the Rat on a hotel PoS system. But one way to avoid being the victim of credit card crime is to invest in a prepaid credit card.

These work in much the same way as a credit card but are not tied to a bank account, meaning you only load a specific amount onto the card.

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A survey of more than 1,000 technology experts has found that the majority believe contactless payment will overtake cash and credit cards in this decade.

The survey found that more than 60% of technology experts felt that paying with smartphones will be widespread within just eight years.

Smartphones use Near Field Communication to make contactless payments, in which a sensor in the device and another in the payment terminal trigger a transaction.

The technology is becoming increasingly popular, with technology companies such as Google introducing the payment method.

Technology giant Apple is also rumoured to be developing its own contactless payment app, which is expected to use Near Field Communication. There are also a number of start-up companies looking to capitalise on the growing popularity of the payment method.

In the US, more than 10% of mobile phone users have made a payment using their smartphone, a trend that is set to continue this year and into the future.

“NFC is going to play a much more prominent role, a major role in m-commerce,” said Chris Silva, an analyst with Altimeter Group.

The timeframe for the growth of contactless payment has been the subject of much debate, as credit card companies are reluctant to allow different payment methods into the market.

“There was a relatively strong notion that it’s something that may not happen really quickly due to the reluctance of incumbents to cede their place in the market,” added Mr Silva.

There has also been concern about the security risks associated with contactless payment, as there have been a number of cases of users having their card details stolen.

It was revealed recently that users of Google Wallet could have their details hacked, thanks to a flaw in the payment technology.

It was found that anyone with a Google Wallet-enabled device can change the PIN by clearing the data on the app. When a new PIN is asked for, the hacker can access the funds in the account the smartphone is tied to.

Barclay’s contactless credit card has also come under fire recently, as it was discovered that details on the card could be stolen by simply waving a smartphone in front of it.

Prepaid credit cards are a good way to bypass most security risks, as they are not tied to a bank account and only have a specific amount of funds on them.

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There are currently 31 million card users in the UK, and they are set to see a new type of credit card statement for the first time this year.

The new statements are designed to make it easier for credit card customers to see how they have been using their card in the past year.

It has been designed by the UK Cards Association, in a partnership with the Department for Business, Innovation and Skills.

The statement will feature a range of details about the credit card, including the total spend on the card, the amount repaid, and any charges or interest fees incurred.

“Annual credit card statements will help empower customers by giving a clear view of how they’ve each managed their plastic over the past year,” Melanie Johnson, Chair of The UK Cards Association.

“By clearly setting out costs and charges this industry initiative could help customers get a better deal either by being more savvy about how they use their current card, or by changing to another account that’s a better fit.”

Each credit card company’s statement will include the same information, making it easier for customers to compare different cards.

Some credit card companies have already started sending out the new statements, while other customers will see their first annual statement on the anniversary of the date the account was opened.

As well as total spend and amount repaid, the new statements will also show customers exactly how they have used their card in the last 12 months.

This will be done by providing details of point-of-sale spending, and any cash advances or balance transfers. These types of transactions will also come with details of any interest fees or charges incurred.

As well as transactions made in the UK, the new statements will also provide information on any foreign transactions, and the charges they incur.

The new statements will certainly make it easier for cardholders to manage their credit card spending, but using a credit card can still make the debt add up.

Another option is a prepaid card. These work in much the same way as a credit card, but are not tied to a bank account of any kind.

Not only does this make it impossible to build up debt, as you can only spend the amount you load onto the card, but you are in no danger of being the victim of fraud.

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It was found that the average male credit card user will spend 15% more with his plastic than the average female card user will.

The research also revealed that men spend more than women on typically male things, such as cars, sports and hardware.

Conversely, women were found to spend more than their male counterparts on typically female things, like clothes, healthcare and pharmaceuticals.

The gender-stereotypical spending is an interesting finding from the research, which was conducted by the Card branch of Santander.

It found that, when it comes to credit card spending, men are all about their cars. Men spend an average of 113% more than women on car rental with their credit cards.

Other car-related spending included at car accessory outlets, where men spend 108% more than women; and repair shops, where men spend 68% more than women.

It was also found that men spend more on keeping their car running, spending 63% more than women on credit cards at the petrol pumps.

Other areas where men out-spend women with their credit cards include on sporting events, hotels, dining at restaurants and drinking in bars.

But there are plenty of areas where women outdo the men on credit card spending. In true gender conformation, credit card spending is all about shopping for women.

The research found that women spend 83% more than men with their plastic in clothes shop, while also spending 38% more at department stores.

As well as dressing well, women also want to look and feel good. It was found that they spend 87% more than men at pharmacies, and 20% more on health care.

But it’s not all clothes and home furnishings; it seems women are taking on the weekly shop – spending 12% more in supermarkets than men.

“It’s revealing that people seem to conform to gender stereotypes in their credit card usage, with women using their cards more in clothes shops and department stores and men spending more on their vehicles, in sports shops and in bars and restaurants,” said Adam Mussert, from Santander Cards.

Credit cards can be useful for consumers, with some offering a range of rewards. But they can also be a dangerous spending tool, forcing people into heavy debt.

A prepaid card is a far more sensible option for both men and women. By loading a set amount on a prepaid card, there is no danger of over-spending or acquiring debt.

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An official company email stated: “We are happy to announce that you can now add the Google Prepaid Card back to your wallet with the newest version of Google Wallet.

“To add the Google Prepaid Card back, you will first need to update your Google Wallet application to the most recent version.”

It was revealed last month that unauthorised access to prepaid credit card balances could be granted on mobile devices.

This potentially allowed anyone to get hold of (and spend) any existing balances on a prepaid card linked to the Google wallet application.

Digital pick pockets were able to access the cash by tapping into an existing balance on a wallet and simply changing the settings.

The discovery was made by a blogger known as The Smartphone Champ.

The mysterious character demonstrated that by going into the settings on an Android phone and blanking all the settings for a Google Wallet, anybody could conceivably gain access to a prepaid credit card linked with the device.

It was a damaging revelation for an application that the IT giant was particularly proud of.

It is worth noting that this new solution to the problem will only work for customers who are re-initialising Google Wallet on the same phone.

Anybody who wishes to set up their details and cards on a new device will have to contact Google initially to get started.

Additional security issues

Google have also been under scrutiny recently for other issues related to the new application.

One particular security company recently devised a method for cracking a PIN for the wallet.

Zvelo, the web security provider, suggested that the PIN for the wallet WAS NOT stored in its ‘secure element’ within the Android operating system.

Google claims that this can be prevented if the phone owner activates a specific screen lock feature on their phone.

This requires an additional PIN to be entered whenever the phone is activated. If the thief does not know that PIN, then they cannot get into the phone to get access to the prepaid funds.

Prepaid credit cards are generally a safe method of using cash. It is not connected to any bank accounts and, therefore, in the event of theft there is no risk of ID fraud.

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