185% increase in online fraud

02 October 2008

Online fraud reaches record high

Figures released yesterday have shown that losses resulting from online banking fraud have surged to record levels.

According to Apacs, the UK trade association for payments, the amount of money obtained by internet fraudsters from banking customers increased by 185% during the first half of 2008 as a result of an increase in phishing and spyware scams.

The number of incidents of phishing – where fraudsters produce websites to look like the authentic banks’ sites to trick customers into inputting account and security details – has quadrupled during the last two years, to 20,682 today from 5,087 in the first six months of 2006. The losses recorded increased from £7.5 million in the six months from January to June in 2007, to £21.4 million in the same period this month.

A spokesman for Apacs said: “Phishing scams have grown a lot more convincing and sophisticated.

“Two years ago, they were easy to spot because they were littered with spelling and grammar mistakes. Now, the websites really do look like the real thing.”

Bank customers have been advised to be extra vigilant due to the increased sophistication of the phishing websites.

Apacs also said evidence suggests that banks are growing ever more reluctant to refund customers who have fallen foul of phishing scams.

Current guidelines state that if the customer has not been negligent or fraudulent, then the bank has to offer a refund. However, as it’s the banks that face the increasing costs of internet fraud, they are arguing that when customers enter their details into phishing websites they are guilty of negligence.

“We are seeing some banks increasingly adopting the tactic of not refunding on the grounds that if they go to great lengths to warn the customer about phishing attacks, then it is the customer’s fault if they are caught out,” said the Apacs spokesman.

Sandra Quinn, a director of Apacs, said: “To help tackle online fraud, we continue to urge shoppers to protect their computer with up-to-date anti-virus software, only use secure websites and register with MasterCard SecureCode and Verified by Visa when prompted.”