Online banking fraud up 55 per cent

Banks lost nearly as much to online fraud in the first half of this year than for the whole of 2005, a House of Lords inquiry into personal internet security was told yesterday.

Total losses for 2005 stood at £23.2m, itself a 90 per cent increase on the previous year. The figure for 2006 up to July was £22.5m, a 55 per cent increase on the same period last year, revealed Sarah Quinn, communications director of the banking organisation APACS.

The figures relate specifically to online banking, and not to fraud involving electronic shopping.

Quinn claimed that the increase for all of 2006 would be less than last year.

"But it is certainly not going to be a non-dramatic rise. It is still of concern," she told the inquiry, set up by the House of Lords Science and Technology Committee.

It also heard that the volume of phishing emails rose by 8,000 per cent between January 2005 and September 2006. Colin Whittaker, APACS head of security, argued that it accounted for between 25 per cent and 50 per cent of losses to customer accounts.

He said the growth was partly because criminals had been able to industrialise the process but he argued that it was also an indication that few people were falling for dodgy emails.

"The less successful phishing emails are, the more need to be sent out," he said.

Banking representatives repeated resisted calls to "name and shame" banks with large losses to phishing and other online fraud. Lord Broers, who is heading the inquiry, asked the APACS if it would not provide the names because it represented the interests of the banks rather than the customers.

Whittaker said the level of security at different banks was "relatively equal ".

He added: "It’s not the banks that are being attacked. It is their customers who are being attacked."

See also How their lordships fenced with banks over web security

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