Online banking fraud is on the rise, according to the latest figures from UK payments association Apacs, but experts say there are several technological solutions that banks could use to combat the problem.
Figures for the first six months of this year show a 55 percent rise in losses through online banking fraud to £22.5m, compared with £14.5m for the same period last year and £4m in 2004.
According to the association, the losses were mainly due to phishing attacks, which increased to 5,000 in the first half of this year, compared with only 312 for the same period in 2005.
“Phishing attacks will undoubtedly continue to rise, and as fraudsters get more sophisticated, measures such as using anti-spam and antivirus technology won’t be enough to protect consumers,” warned security consultant Donal Casey of IT consultancy Morse.
He added that two-factor authentication technology – which Barclays will roll out next year and others are trialling – would provide clients with an extra level of security.
Dave Martin, managing consultant with Logica CMG, said his firm’s Secure Mail system, which encrypts emails and provides a verification button for users to check the message is authentic, could help banks to foil phishing attacks.
“New users are coming on the internet all the time and they are vulnerable,” he said. “Using Secure Mail you can guarantee confidentiality, authenticity and that the content hasn’t changed. We are in discussions with potential clients.”
Chris Barling, chief executive of e-commerce software specialist Actinic, argued that banks should “take the lead in countering card crime”, by encouraging merchants to sign up to fraud prevention schemes such as Verified by Visa.
These schemes provide an extra level of security by requiring users to type in a unique password. However, some online merchants worry that this could discourage potential customers from using a site.
“The most effective anti-fraud measures such as Verified by Visa can only be led by the banks, as they involve some inconvenience for buyers, and it’s commercial suicide for any one merchant to implement alone,” Barling explained.
Lee Britton, chief executive of e-payment specialist Altair Financial Services International, argued that prepaid cards similar to mobile phone top-up cards could be another option. “It is like having a reloadable, disposable card,” he said. “Consumers are protected from the ongoing problems associated with card fraud.”
