Online banking fraud continues to rise

Overall losses from fraud in the UK has fallen except for one area; online banking, according to the latest annual figures released by the UK Cards Association and Financial Fraud Action UK.

The UK card association and fraud prevention body found this crime has continued to rise; up 14 per cent on 2008 figures when losses stood at £52.5m to reach £59.7m last year.

The report said that this was partly due to cyber criminals targeting victims with increasingly clever methods, including launching increasingly sophisticated phishing attacks.

The association said 51,000 phishing incidents were reported last year; up 16 per cent on 2008. However, it also said the criminals continue to target vulnerabilities on customers’ PCs.

Phone banking fraud losses were collated for the first time in 2009 and totalled £12.1m. Most losses involve customers being duped during a phone call into disclosing security details, which the criminal then uses to commit fraud.

Mel Morris, chief executive officer with security firm Prevx said: "Online fraud is up for many reasons. For example, today anyone with a PC can purchase a banking fraud kit online for a few thousand pounds.

“These kits allow the purchaser to target PCs anywhere in the world and infect them with a powerful information-stealing Trojan (or Bot), which monitors all internet activity, recording everything and anything entered or displayed by someone browsing the web.

“In my view… in order to address the fraud problem, the industry needs to st op selling these silver bullets and instead educate people on the realities of PC and internet security. For instance, how having more layers of security is better than one.”

On a more positive note, the results of this survey show card fraud was down. Card not present fraud – crimes committed over the internet, phone and mail order – was down by 19 per cent from £324.4m in 2008 to £266.4m in 2009.

Fraud committed using counterfeit (skimmed or cloned) cards fell over the same period from £159.8m to £80.9m which is a decrease of more than a half (52 per cent).

Fraud on lost and stolen cards and card ID theft was also lower bringing the total fraud losses on UK cards down by 28 per cent between 2008 and 2009 to £440.3m – a decrease of £170m on the previous year’s total.

Melanie Johnson, of the UK Cards Association, which represents UK credit and debit card providers said: "The cards industry sees fighting fraud as a key part of keeping its customers' interests centre-stage. We are committed to a wide range of measures to ensure customers feel confident, safe and secure when they use their credit and debit cards, whether in a shop, abroad, online, at a cash machine or anywhere else.

"And a fall in card fraud is good news for everyone – UK consumers, retailers and the industry.

"We recognise that cards will always be targeted by criminals, so we are determined not only to continue to prevent, detect and deter those who are behind this type of crime, but also to make sure that innocent victims don't lose out."