Cybersquatting poses the greatest threat to brand reputation, according to a report launched by MarkMonitor today.

The research, which tracks the top 25 brands from the 2006 Top 100 Interbrand study, found that cybersquatting is the most frequent form of abuse with more than 275,000 instances recorded in Q1 2007. It also reveals that because of the strong brand association created, this form of attack is often combined with another, such as e-commerce, pay-per-click fraud and kiting.

“Brand holders face a double whammy – not only is the volume of these abuses significant, but attackers are becoming alarmingly savvy marketers,” says Frederick Felman, chief marketing officer for MarkMonitor. “Our analysis identifies cybersquatting as a driver leading to other abuses that further degrade brand value, customer loyalty and revenues.”

Phishing incidents also rose by 104 per cent over the same period, according to the report. The internet fraud prevention company attributes this to advances in phishing technology, in particular one-time use and unique URL attacks, which are evading the traditional blocking techniques.

The number of brands targeted in phishing attacks reached an all-time high of 229 last month, the report shows. “Botnets and phish kites have reduced the technology requirements and resources needed to execute attacks,” says Felman. “Phishers are adopting direct marketing methodologies to experiment with brands, evaluate efficiencies and exploit lax enforcement.”

Phishers targeted the financial services industry the most, with 41 per cent of all phishing scams directed at this sector, an increase of 12 per cent from the same period last year.

“This rise in attacks on financial institutions is not surprising,” added Felman. “The yield for online banking credentials is incredibly high for phishers. They are taking advantage of the large number of mergers and acquisitions as well as the ongoing shift from brick-and-mortar to online banking. Customers are confused and the phishers are capitalising on it.”