Online banking fraud increased to £33.5m in 2006 driven largely by phishing attacks

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UK banking fraud leaps 44 per cent

Chip and Pin protection pushing scams abroad

Matt Chapman, vnunet.com 14 Mar 2007

UK online banking fraud leapt 44 per cent in 2006 following a rise in the number of phishing attacks, according to figures released today.

Apacs, the UK payments association, found that online banking fraud increased from £23.2m in 2005 to £33.5m in 2006.

"It is clear that phishing scams are one of the primary attack methods used by cyber-criminals and the Apacs figures put this into startling reality," said Greg Day, senior security analyst at McAfee.

Day said that, as users became more aware of these attacks, cyber-criminals are more likely to target smaller institutions using more advanced methods.

The figures also show that chip and Pin has reduced the amount of face-to-face fraud at UK retailers by 47 per cent since 2005. However, this reduction has forced fraudulent activity abroad or onto the internet.

Illegal transactions overseas amounted to £118.2m in 2006, a rise of 43 per cent over 2005.

Card-not-present fraud carried out over the internet or telephone increased by 16 per cent to £212.6m in 2006, making up just under half of all card fraud losses.

"Chip and Pin has had a hugely positive effect on fraud losses over the counter in UK shops and stores," said Sandra Quinn, director of communications at Apacs.

"But we are seeing more fraud on transactions that do not use chip and Pin, such as over the internet and phone, by mail order and abroad in countries that have not yet fully upgraded to chip and Pin."

Day maintained that it is important for businesses to consider the potential impact that online and phishing attacks could have on their credentials.

"Phishing is not just targeted at consumers, and this type of online scam can be adapted to steal more than bank details, with the value of intellectual business property increasing," he said.

"Businesses must ensure that they have the appropriate technology and processes in place to protect their employees and their own reputation."

Quinn added that the fight against fraud will not succeed with a single-layer approach and will only improve when public and private bodies work together.

"That includes developing and implementing strategies, sharing best practice and, most importantly, sharing data," she said.

"We need government intervention to remove the current barriers to this and we welcome improvements proposed in the Fraud Review and the Serious Crime Bill. "

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