Phishing scams push up web banking fraud losses

Millions of Britons are still not aware of some basic security pitfalls

A hike in the volume and effectiveness of phishing scams caused online banking fraud losses to jump sharply in the first six months of this year, according to new figures released today by the Association for Payment Clearing Services (Apacs).

The UK payments trade association reported that web bank losses rose by 55 per cent from £14.5m in the first six months of 2005 to £22.5m in the same period this year.

Apacs warned that "millions of Britons are still not aware of some basic security pitfalls".

More than half of online shoppers never check that a website address changes from http to https before making a purchase, indicating that awareness of secure shopping advice is low.

Losses from online, phone and mail order fraud were found to have grown slowly compared to the growth in the number of online transactions.

More than 26.4 million people now shop online with an estimated 372 million transactions being undertaken last year.

The majority of internet card fraud, however, involves a criminal obtaining genuine card details in the real world which are then used to shop online.

A quarter of all Britons have disclosed their Pin to someone else, exposing them to a heightened risk of fraud and potentially making them liable for any card fraud losses they may suffer.

More than a quarter of people admitted using the same Pin for all their cards, which makes life easier for the fraudster given that each cardholder in the UK has an average of four cards.

Increases in counterfeit card fraud losses were mainly driven by fraudsters copying magnetic strip details and using hidden miniature cameras to capture Pins at cash machines.

Criminals then create fake magnetic strips for use at cash machines and tills that have not been upgraded to chip and Pin.

However, internet, phone and mail order fraud (i.e. card-not-present fraud) increased at a much slower rate than seen previously.

Card-not-present fraud now accounts for 46 per cent of all losses but grew by just five per cent year-on-year, compared to a 29 per cent increase between 2004 and 2005.