Compensation not guaranteed for victims of online fraud says Which?

London, UK - 6 March 2007

Financial sector should concentrate on online crime prevention, says LogicaCMG

LogicaCMG urges the financial sector to focus on online crime prevention
55 per cent increase in losses from fraudulent online transactions in 2006
Phishing scams net £22.5 million in first six months of last year

Impartial financial information provider, Which? announced last week that despite a dramatic increase in online security breaches, victims of Internet crime are no longer guaranteed to have losses refunded by their bank. This will compound consumer fears regarding online financial services and comes at a time when the industry should be focussing on the prevention of such incidents, says LogicaCMG.

Internet crime is increasingly in the public eye with the UK payments association, APACS, recently reporting a surge in ‘phishing’ throughout the first half of 2006. UK banks reported a 55 per cent increase in losses from fraudulent online transactions for the same period with losses attributed to ‘phishing’ scams totalling £22.5 million, up from £14.5 million in the first six months of 2005.

Dave Martin, managing consultant at LogicaCMG, comments: “Sending confidential documents and personal data is one of the greatest challenges facing Internet users today. While ISPs and government bodies have gone some way to ensure users are educated and aware of the dangers of communicating online, there is always room to do more. Secure encrypted email services allow users to avoid these risks where possible. For example, banks can use secure encrypted email to not only communicate securely with customers, but also eliminate the cost of sending out paper-based statements which is more environmentally-friendly too.

Research conducted on LogicaCMG’s behalf at the recent Internet crime Parliamentary Advisory Forum cited the financial sector as the primary potential user of this type of service. The vast majority of respondents (93 per cent) stated that the financial sector should consider measures such as secure email solutions in order to combat the rise of ‘phishing’ threats.

Dave Martin concludes: “While no solution can claim to be 100 per cent effective, encrypted email which allows sender/recipient authentication offers a further layer of security when communicating personal or private information online, which will help to reduce the threat from ‘phishing’. The adoption of this type of preventative measure will be fundamental to the successful take up of and renewed consumer confidence in this sector.“

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