19 August 2017
visit www.avoka.com

Online fraud costing NAB millions

19 July 2005  |  9244 views  |  0 money in bin_1

The National Australia Bank is losing about A$1 million a month to Internet banking fraud, according to a confidential internal document acquired by Australian newspaper Herald Sun BusinessDaily.

According to the newspaper article, the document was issued to senior technology staff as part of a drive to improve online security and stem a "tide of losses".

The report warns that Internet banking fraud is on the increase with criminals using "increasingly sophisticated" ways of stealing customers' details. The document also claims fraudsters are tricking Web banking customers into becoming couriers and moving stolen funds out of the country.

The document is dated July last year and describes the growth in fraud in the year to June 2004 as "exponential". The report led to a security boost two months ago but it is believed the rate of fraud is still growing.

For June 2004, the bank incurred A$1 million in online fraud losses, most relating to "Type 007" activity which includes losses on accounts arising from the fraudulent use of worms, viruses and spoof Web sites.

According to the report, NAB incurred losses from Internet banking fraud totalling A$2.04 million in 2003, although net losses reduced to A$1.5 million after investigations.

The report says potential losses are expected to rise to A$6.1 million this year and A$8.3 million in 2008. But under worst case scenarios cited in the report, the bank's technology staff predict it could lose up to A$14.1 million this year and up to A$31.5 million in 2008.

The NAB figures suggest online losses by Australian banks could already be close to $70 million a year.

In a bid to increase online security and stem losses NAB has introduced an SMS messaging service to provide PIN-protected access to Internet banking services.

Although the SMS scheme is currently voluntary, the leaked document suggests that it will need to become mandatory "at some point". NAB executives predict the incidence of online fraud will reduce by 90% once the majority (90%) of online customers are registered for the SMS service.

According to figures from The Australian Bankers Association (ABA), the country's banks lost A$10 million to online fraud last year.

The ABA said in March that Australian banks would introduce an industry standard for two-factor authentication for verifying online banking customers later this year, although each bank is free to choose its own method of secondary identification.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

NAB rogue FX trader gaoled

NAB rogue FX trader gaoled

16 June 2005  |  9265 views  |  0 comments
NAB to slash 10.5% of global workforce in cost-cutting programme

NAB to slash 10.5% of global workforce in cost-cutting programme

11 May 2005  |  6979 views  |  0 comments
NAB beefs up online security with SMS text authentication

NAB beefs up online security with SMS text authentication

04 May 2005  |  8465 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
download the paper nowvisit www.dorsum.euvisit www.worldpaymentsreport.com

Top topics

Most viewed Most shared
Mobile contactless spending accelerating in UKMobile contactless spending accelerating i...
8672 views comments | 23 tweets | 23 linkedin
Norwegian banks and startups form fintech clusterNorwegian banks and startups form fintech...
7683 views comments | 19 tweets | 23 linkedin
RBS to bring Silicon Valley to EdinburghRBS to bring Silicon Valley to Edinburgh
6925 views comments | 10 tweets | 7 linkedin
hands typing furiouslyWhy Blockchain Might Not Be The Future For...
6348 views 1 | 5 tweets | 3 linkedin
Apple sidelined as Beijing transit system launches payments appApple sidelined as Beijing transit system...
6200 views comments | 11 tweets | 9 linkedin

Featured job

Competitive base and bonus, plus benefits
London, UK

Find your next job