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This story was printed from silicon.com, located at http://www.silicon.com/

Story URL: http://www.silicon.com/financialservices/0,3800010322,39159272,00.htm

Are banks doing enough to stop online fraud?
Antivirus software, key fobs offered up as protection...

By Dan Ilett

Published: Tuesday 06 June 2006

Barclays Bank recently announced it is to give customers antivirus software in a bid to stop them being fleeced by fraud.

The move is part of a trend by high street banks to reassure customers that online transactions are safe to perform.

Barclays is, however, quick to point out customers are not required to use the software - and that recommending which type of antivirus software their customers should use does not make the bank liable for any losses due to online fraud.

A Barclays spokeswoman told silicon.com: "All we are saying is: here's an offer and if you want it you can have it for free. It's a good idea to use it but we're not forcing anyone. It doesn't alter any liability."

Barclays is not the only bank providing new tools to customers in a bid to improve security for their online services. Lloyds TSB is trialling the use of two-factor authentication tokens and offering customers discounted antivirus software, as is NatWest. Alliance & Leicester is also providing two-factor authentication tokens to customers as an extra security layer at login.

But some analysts are unconvinced the measures banks are taking are enough to ensure customers' money and identities are secure.

Chris Skinner, associate director of analyst Tower Group, said: "If anything the banks should be more vigilant in terms of putting anti-spyware software in these packages."

He added: "Banks are quite rightly informing their customers which [tools] they need to use with internet banking. But all the security measures, such as key fobs and chip and PIN, are completely useless because they will never stop [fraud] altogether."

An online transaction costs a bank a fraction of what it costs to do a transaction in a branch, so many banks are keen to promote the internet. And with growing concern over the level of identity fraud, that equates to reassuring the public and giving them the tools to protect themselves.

It is likely banks have also realised there is a good business case for providing better security - it's cheaper to secure customer funds than let them be plundered and have to provide compensation afterwards.

A spokesman for Apacs, the banking industry body, told silicon.com: "If you are a victim of phishing, for example, in this country you are refunded, so it could be as much in [the banks'] interests to make sure their customers are protected. It depends on how much fraud [banks] are seeing."

According to figures from Apacs, online banking fraud is a growing problem. Losses from this type of fraud doubled in 2005, hitting £23.2m, due to the rise in email phishing scams. And last year internet, phone and mail-order transactions - and card-not-present fraud - rose by 21 per cent to £183.2m.