Call to tighten banking rules to protect online fraud victims

05 Mar, 2007

Consumer group Which? has called for banking regulations to be tightened to protect victims of online fraud. Which? Money said the Banking Code must be amended to safeguard those who lose money through online scams - a practice that has increased dramatically in recent years.
Total card fraud fell by 5 percent in the first half of 2006, according to recent figures from APACS, the UK's payments association. It expects full-year figures, due out next month, to fall further.
However, fraudulent activity through "remote" transactions, also known as "card-not-present" fraud, rose 5 percent to 95.3 million pounds in the six months to end-June. Of that, online banking fraud surged 55 percent to 22.5 million pounds.
Total Internet fraud represented nearly half of total plastic card fraud losses of 209.3 million pounds - making it the largest single form of plastic card fraud.
Unless consumers have been grossly negligent - by leaving their PIN with their card, for example - the most they can usually be liable for fraud on cards is 50 pounds, which is usually waived.
But if people lose money as a result of online fraud - such as "phishing" scams whereby criminals send false e-mails that appear to come from banks and obtain the information needed to hijack current or credit card accounts - they do not get the same protection.
Martyn Hocking, editor of Which? Money, said: "People probably aren't aware that they're not guaranteed to have their losses refunded if they're a victim of online fraud.
"If you receive an email that seems to be from your bank, don't reply to it - give your bank a call instead."
He said people could take other steps to reduce the risk of fraud, such as shredding personal information and checking bank statements.
He warned people against buying identity theft insurance, saying these policies played on people's fears and were highly unlikely to be good value for money.
APACS has unveiled a pilot scheme to beat Internet fraud that will involve banks issuing every customer with their own hand-held credit card reader.
The next generation of fraud prevention technology - designed to safeguard consumers when buying goods over the Internet, by telephone or mail order - has been developed in partnership with banks, card schemes, retailers, trade associations and systems vendors. Its introduction will start later this year.

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