Online Banking Fraud is on the Rise in the UK
The instances of fraudsters using software that enables them to access bank accounts has rose dramatically in 2008 when compared with such occurrences in previous years. According to bank authorities, online banking fraud doubled in this year alone. The device used by fraudsters to accomplish this task is called keylogging.
Through the process of tracking the keystrokes on a computer that they can hack into, they are able to gain access to passwords and credit card information, which they then use to access numerous accounts.
According to a representative of Apacs, a UK firm handling online payments, online banking fraud in 2008 amounted to £52.5 million. During the previous year, this amount was less than half that at £22.7 million. There is even a greater amount of online fraud when you compare the amounts with that of 2004, which was £12.2 million.
The losses incurred with credit cards and debit cards in 2008 as a result of fraudulent activity was over £609 million representing a 14% increase over that incurred in 2007. The good news is that customers who find themselves the victim of such fraud are not considered liable for the money and the funds are returned to their accounts.
One of the reasons for this increase in the amount of online banking fraud is that more and more people are taking advantage of online banking for paying their bills and for shopping online. They are able to conduct their financial affairs from home on their personal computers rather than have to adhere to banking hours. Along with the advances in technology that allows this convenience comes the availability of more advanced software making it easier for the computer literate con artists.
The only way that fraudsters can gain access to your financial information by using this software is through unsolicited emails that supposedly come from your bank. When you click on the email to open it, the software installs itself on your computer and the fraudsters can track your activity.
According to one spokesperson from Apacs, “The industry continues to remind customers to ensure that they have their computer’s firewall switched on and anti-virus software up to date.”
The UK did bring in the policy of chip-and-pin to combat fraud in the use of credit and debit cards, which resulted in a decrease of online fraud in 2006 and 2007. However, it has risen in 2008 with the largest numbers of fraudulent activity taking place with online shopping where chip-and-pin cards were not used for the transactions. Statistics show that the level of fraud rose 13% to the tune of £328 million.
Card ID theft represented the greatest type of online fraud in 2008. In this type of activity, fraudsters gained control of unsuspecting customers’ accounts. The percentage of increase in this activity during this year was 39% over previous years with the total amount of losses being £47.4 million. However, losses that occurred as a result of card turnover for the same period of time are down.
It seems that the activity in online banking with the use of credit and debit cards has been in the use of UK cards for overseas purchases. This is because of the fact that chip-and-pin technology is not used in these countries, making it very easy for fraudsters to use the cards. The Banking Code of the UK states that customers who are the victim of online banking fraud are not liable for the losses and will be reimbursed for the loss.