Online banking and internet fraud losses down

There was good news for online retailers and banks today after it was revealed that online banking fraud losses dropped by nearly a quarter, while internet and other card-not-present fraud losses fell by 15 per cent last year, although experts warned that threats persist.

The official figures from the UK Cards Association and Financial Fraud Action UK, both part of the UK Payments Administration, reported that online banking fraud losses totalled £46.7m in 2010, a 22 per cent fall on the 2009 figure of £59.7m.

Internet fraud, which is wrapped into card-not-present along with phone and mail order fraud losses, fell by 15 per cent from £266.4m to £226.9m.

The payments industry appears to be attributing the drop in fraud losses to an improvement in consumer awareness of cyber threats and the growing sophistication of banks' fraud prevention software.

However, it was not all good news, as phishing attacks appear to have risen by 21 per cent over the same period.

"Whilst another drop in fraud is good news, the fraudsters haven't shut up shop which is why there can be no room for complacency on the part of the banking industry, retailers, law enforcement or indeed customers," said detective chief inspector Paul Barnard, head of the Dedicated Cheque and Plastic Crime Unit.

"By taking simple steps, such as shielding our PIN with our free hand whenever we enter it, being wary of unsolicited emails or calls, and making sure that our computers have regularly updated anti-virus software in place, we can make life harder for the criminals."

James Rendell, e-crime director at consultancy Deloitte, welcomed the news.

"It proves that, with the proper implementation of fraud awareness for customers and staff, effective policies and controls, supported by good fraud prevention technology, real reductions in online fraud and e-crime are achievable," he said.

"Now that fraud prevention processes and technologies are taking hold, the next phase will be to use them to continue driving down fraud levels whilst ensuring customer experience remains centre stage."

Mickey Boodaei, chief executive of banking security firm Trusteer, argued that the figures should not give the impression that the cyber criminals have given up.

He said that recently discovered sophisticated malware such as Tatanga, Oddjob, and man-in-the-mobile malware for Android, BlackBerry and other mobile platforms show that banks and other organisations need to ensure that they can cope with the latest threats.

"The fact the losses are down doesn't mean that the number of attacks is down. However, UK banks have rolled out different fraud prevention mechanisms in the last year that make it harder for fraudsters to get money out of the banking system," he said.

"The involvement and investment from law enforcement agencies has helped as well. If the UK banking industry continues to invest in fraud prevention and keeps the bar high for fraudsters, they'll be able to push fraud rates even lower."