Online banking fraud falls by a third

Improvements in security technology are helping drive down fraud in the UK, with online banking fraud down by nearly a third in the first six months of 2011, according to new figures.

The newly published figures from banking industry group Financial Fraud Action UK show that losses from card fraud were £170m between January and June 2011. This represents a 9 per cent decrease from the same period last year.

Meanwhile, online banking fraud losses totalled £16.9m, a 32 per cent drop on the half-year figures for 2010.

The FFA attributed the drop in card fraud to increased use of fraud detection software and the continuing rollout of chip and pin technology.

Commenting on the research, DCI Paul Barnard, head of the dedicated cheque and plastic crime unit (DCPCU), a banking industry-sponsored police unit, said: “Losses are appreciably lower than they were a few years ago. However, there has been an increase in old-fashioned scams – criminals using distraction techniques and social engineering methods to get hold of people’s cards or phone banking details.”

While the drop in online banking and card fraud is good news, it comes at a price, warned William Beer, director of information and cyber security practices at PwC.

“Two-factor authentication has now become common, with customers having to carry a keyfob or other device in order to log into their bank accounts. While this has lessened the risk of fraud, it has introduced an element of inflexibility into the system and should not be seen as a silver bullet,” he said.