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An article relating to this blog post on Finextra:

UK online banking fraud soars

Industry losses from online banking fraud increased a massive 185% in the first half of the year to £21.4 million, according to figures released by UK payments association Apacs.

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Behind the APACS numbers

The fraud results released by APACS are generally as expected in the industry, with steady increases in card-not-present (CNP) and counterfeit card fraud, however there are a few numbers that raise questions. The first of these is with UK retailer (face-to-face) transactions, where fraud has increased by 26 percent since the same period in 2007. These numbers are still down from 2005, but it is interesting to note that following a steady downward trend for the first few years this has now started to increase. This trend can also be seen in ATM fraud, which is up 22 percent since the same time last year.

The increase in online banking fraud is possibly easier to explain, as it ties in with the increased phishing activity we saw in the UK in the run up to the Faster Payments launch. However, banks in the UK are starting to use increasingly sophisticated methods to counter the threat of online banking fraud. One method is monitoring the IP address that is being used to log onto online bank accounts and comparing it to both known suspect addresses and the customer's own usual pattern of activity, which can help identify fraud immediately. With such anti-fraud methods in place, I feel confident that we will see these numbers start to decrease in the future.

These tools can also be used to help manage CNP fraud levels - by mandating that IP data is included in the transaction information, banks will be able to stop fraudulent transactions before they happen, especially if IP data is combined with two-factor authentication methods.

The APACS figures are a very useful measure of the amount of fraud we are seeing on UK-issued cards, and will hopefully reiterate to banks, consumers and retailers the importance of fraud prevention and detection. The percentage of fraud is still low compared to the actual amount of money spent on cards or through online banking, however, the whole industry needs to work together to ensure it remains this way.


Comments: (1)

A Finextra member
A Finextra member 23 October, 2008, 01:00Be the first to give this comment the thumbs up 0 likes

Of course the crooks won't adapt to the IP thingy, perhaps 'botting up' your neighbours, DOSing the your PC, if they can't be bothered to do it with the your machine directly, or be bothered with other getting-to-be-well-known techniques.

More's Law - more fraud.

Just how much More is all this hoo-haa costing on top of the actual transaction process? Does it reduce the other risk for merchants? (ala TJX)

Does it enable even the smallest merchant to run loyalty programs? I bet there was no mention of needing all the hoo-haa when they were sold on the concept. Does it lower the total cost of the transactions or are they More ..?

Just wondering.

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