An incident in which a web user's eBay account was compromised by hackers has highlighted the need to increase online security in a bid to improve user confidence.

In a highly publicised case last week, the eBay account of Gloria Geary, a Washington-based artist, was taken over by fraudsters who locked Geary out of her account and attempted to make a quick buck by advertising the fake sale of a processor.

Fortunately Geary managed to alert eBay to the fraud and thwart the intruders. But this type of scam has recently become a concern for eBay, which has received a number of complaints from victims of similar attacks over the past few months.

Although security experts have been quoted as saying that eBay needs to remedy this problem and understand that this combination of identity theft and hacking is set to become an increasing problem in the future, it's not just a security issue.

US law firm Philippsohn Crawfords and Berwald said that under data protection legislation, "companies are under a duty to take steps to keep personal data secure".

The firm quoted the Turnbull guidelines which. although without statutory force, require companies to take steps to adequately assess and manage the risk of fraud.

"In the event that they fail to do so, directors may find they have incurred liability to their company," the firm said.

According to reports the auction site is considering locking accounts after there have been several incorrect attempts to enter the password. But the problem here is that malicious users or auction rivals could deliberately lock the accounts of eBay customers, thereby denying the legitimate users access.

Philippsohn Crawfords and Berwald said that the reason consumers have been cautious in their dealings on the internet are because of fears of security.

By increasing online security, sites will increase consumer confidence, the firm said.