UK banks have been criticised in a report by the Treasury Select
Committee for not doing enough to protect consumers from online
fraudsters.
According to the Treasury’s ninth report – Competition and
choice in retail banking – the Committee voiced its surprise
at how unprepared banks appear to be when faced with potential
internet fraud and has recommended the competition authorities
investigate what more can be done to improve online security.
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“Given that a much greater share of the market is likely to be
taken in by the internet in later years it is surprising how little
work has been done to improve security, and the lack of detail
apparently available to the police concerned us,” said the
report.
Online banking fraud losses totalled £46.7m in 2010 – a 22% fall
on the 2009 figure, according to the UK Cards Association. The fall
is attributed to customers better protecting their own
computers with up-to-date anti-virus software combined
with banks’ use of sophisticated fraud detection
software. This decrease has occurred despite a continuing rise in
phishing attacks, up 21% from 2009.
Jim Fulton, VP at security solutions provider DigitalPersona
claims there is a growing need for better authentication but
multi-factor authentication for consumer banking does not always
prove popular among consumers.
“Efforts in the US several years ago showed
passwords were difficult enough; requiring auxiliary credentials
such as tokens never really got off the ground and regulators
allowed banks to use passive credentials such as PC network
addresses and routing information,” says Fulton.
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By GlobalData“However, as people become ever-more familiar
with online banking, the options for advanced authentication become
easier for people to accept, banks are likely to continue looking
at how to prevent unauthorised people from masquerading as
others.
“This will likely be coupled with a different
way of authenticating individual transactions to minimise the
opportunities for new “man-in-the-browser” attacks that sneak in
after the user has authenticated.”
It is believed that the Committee’s call for a
more in-depth look into online banking fraud could prompt an
investigation by the Office of Fair Trading.
