Fearful of damaging their reputations and denting consumer confidence, online banks are hiding the true extent of online fraud, according to a senior police officer.
The Guardian reports that Detective Superintendent Russell Day told an all-party parliamentary group investigating online fraud that banks are failing to report instances of phishing and other forms of swinish behaviour.
One MP, Nigel Evans, estimated that the cost of identity theft to the UK economy could be much greater than the official figure of £1.7 billion a year.
A recent report by the Association of Payment Clearing Services (APACS) estimated that internet fraud accounts for a quarter of all card fraud losses.
Whilst total card fraud losses decreased by 13% in the six months to June 2005 (from £252.6m to £219.4m) compared with the same period in 2004 (mainly due to the introduction of chip and PIN) internet fraud was the one area that continued to grow.
Phishing is believed to be the biggest problem in online banking. The Guardian reports that the number of bogus bank websites increased by nearly 1,500% this year.
For the first six months of this year, internet banking fraud losses reached a total of £22.5m. This represents a 55% increase over the same period in 2005.
Though perhaps foolish, the banking industry’s reluctance to report instances of fraud is understandable, as the public are already fearful of internet crime, with many deterred from shopping and banking online as a result.
However, the best solution to the problem could well be better public awareness of the methods used by criminals to steal personal details. Organisations such as Bank Safe Online offer advice on what kind of scams to look out for.
Online Fraud – Roundtable Briefing, November 2005