Online banking fraud increased by 185 per cent in the first half of 2008.

 

This rise equates to losses of £21.4 million according to figures released by UK payments association Apacs. It said the increase is ‘largely down to criminals targeting e-banking customers through phishing and spyware scams because the banks' own systems have proved difficult to attack.'

 

There has also been an increase in the amount of fraudulent phishing websites set up too, with a reported 20,000 created in the first six months of 2008.

 

Card fraud losses also reached record losses as they increased by 14 per cent to £301.7 million, which Apacs claimed more than 40 per cent - £121.2 million - is due to card fraud abroad.

However card fraud committed in the UK rose by 17 per cent to £180.5 million too. Of this, fraud committed in face-to-face transactions at retailers was up 26 per cent to £47.4 million while losses at cash machines rose 22 per cent to £20.8 million. Card not present fraud was up 18 per cent to £161.9 million and now accounts for over half of all industry losses.

 

Sandra Quinn, director of communications at Apacs: "Criminals continue to target those areas where we do not currently have the security benefits of chip and PIN, causing increases in fraud abroad and phone, internet and mail order shopping fraud. Fraud abroad will be made more difficult for criminals to commit as more countries roll out chip and PIN."

 

Mike Davies, Director of Identity and Authentication Services for VeriSign in EMEA, said: “The report out today and action taken by the banks so far is surprising, given the success that Barclays has seen since adopting strong authentication for its online banking customers.

 

“Barclays' accomplishment in reducing online fraud reinforces the fact that banks and online retailers need to offer additional security, like strong authentication, to their customers to reduce online fraud and account takeover. There is however some backlash from consumers as the technology could be easier to use and more convenient.

 

“By building security into devices that are always with the consumer, like a credit card or mobile phone, this should increase the adoption and really help to reduce online fraud for the banking industry. In addition, consumers should be able to use the same device across all of their online accounts so that they don't have the problem of carrying one around for each website.”