Phishing nets a major rise in online fraud

Published on Friday 9 October 2009 19:40

THE number of people falling victim to online banking scams is soaring as fraudsters switch their attention from bank cards to the internet.

Much of the rise is due to increased exploitation of security weaknesses in home computers to target existing bank accounts.

While card fraud fell by 23 per cent in the first six months of this year compared with the first half of 2008, industry body Financial Fraud Action UK (FFA) this week reported an alarming 55 per cent rise to 39 million in the cost of online banking fraud over the same period.

Online banking fraud has accelerated with the emergence of increasingly sophisticated malicious software programmes, which infect home computers with a virus that logs their keystrokes, including passwords and personal data, according to the FFA.

A spokesman commented: "The increase in online fraud was due largely to criminals employing more sophisticated methods to target online banking customers through malware scams – which target vulnerabilities in customers' PCs – rather than the banks' own systems, which have proved more difficult for the fraudsters to attack."

Jackie Barwell, head of risk and fraud at e-commerce group First Data, suggested the growth in online fraud was a sign of the economic times.

"Fraudsters traditionally turn to the path of least resistance, and when the economy suffers and new credit is scarce, they will gravitate to existing accounts and money rather than try to create new money," she said. The most prominent form of online fraud is "phishing", cases of which were up 26 per cent to 26,000 in the first six months of 2009. Phishing refers to the practice of sending fake e-mails to bank customers to trick them into giving away details such as log-ins, passwords and identity information that could help fraudsters access accounts.

Barwell said: "The traditional e-mail-based phishing attacks are no longer the preferred method of today's more successful phishers as they turn to more creative means, including URLs distributed by instant messages, social networking and texts."

But fraud related to online shopping has fallen by 18 per cent, due primarily to online security measures, such as Verified by Visa, which require cardholders to enter a passwords when making purchases over the web.

Katy Worobec, head of fraud control at the FFA, cautioned against complacency. "Whilst industry online security initiatives such as Verified by Visa and MasterCard SecureCode may be making their presence felt, the fraudsters are never going to shut up shop and, of course, there are emerging areas such as online banking fraud, which has risen again," she said.

Other forms of fraud appear to be dropping off as new, easier targets are identified. But while initiatives such as the chip and pin system have contributed to a fall in card scams, foreign bank cards are being increasingly targeted, with a 36 per cent hike between January and the end of June in fraud committed on foreign issued cards in the UK.

And while credit card fraud has fallen this year, cases of card identity theft continue to rise. Rumina Hassam, personal finance expert at uSwitch.com, advised credit card users to limit the number of accounts they have open at the same time to reduce the risk of credit card fraud

"The two issues may seem unrelated but as many of these accounts could be registered at an old address, these cards are easy pickings for fraudsters," said Hassam. "If this is the case, it could take several weeks or even months to realise that the card has been intercepted."

There are several simple steps you can take to reduce your chances of getting stung by online scams. Here are a few:

&#149 Improve your PC protection. Install anti-virus software and a personal firewall. Also download the most recent security updates for your web browser and operating system (using "check for updates" under the "Tools" menu on internet explorer, for instance). Dr David Jackson, senior security architect at Logica UK, said: "While anti-virus software can be expensive, there are free solutions. Some high street banks provide free or discounted protection tools (including Antivirus software) to customers as part of their on-line banking services."

&#149 Watch out for unsolicited "phishing" e-mails. Your bank would never e-mail you about your account. The e-mails may be convincing but you should never respond to a message asking that you validate, alter or verify your account details.

&#149 Always access your account online by typing the bank's web address into your browser manually, rather than copying and pasting it from an e-mail. When a connection is secure the "http" will change to "https".

&#149 When shopping online make sure the website is secure by checking for a locked padlock or unbroken key symbol in the web browser.

&#149 Sign up to Verified by Visa or Mastercard Securecode for extra security when buying goods or services online.

&#149 Change your passwords regularly, Jackson suggested. "Prevention is always better than cure so make sure you do change passwords, don't use one password for all your online activity and make sure that you never give it out to anyone – no one should ever need to know it."