Online fraud hits record levels

Total amount stolen in the US last year estimated at $1.2bn

Iain Thomson at the RSA Conference in San Francisco, vnunet.com 16 Feb 2005

Nearly 10 million people suffered from some kind of online fraud last year, according to figures released today by Gartner at the RSA Conference in San Francisco.

The analyst firm's survey of US consumers estimated that fraudsters had hit 9.5 million people last year. The total amount was $1.2bn, the bulk of which was stolen by criminal gangs in eastern Europe and African states.

"You hear a lot of numbers but everyone agrees on that figure," said Avivah Litan, research director of payments and fraud at Gartner.

"Banks do not move at lightening speed, but for the first time they are taking it seriously. They are losing money. They don't like to talk about it, but they are."

Litan explained that, while levels of traditional fraud like stolen cheques had remained relatively constant, information theft was rising sharply. This was reflected in higher levels of fraudulent transfers of money from bank accounts.

The analyst praised the banking community for making credit card fraud much more difficult after monitoring unusual sales. But she stressed that more needed to be done to bring the same skills to the rest of the financial services sector.

These levels of fraud would drive investments in security technology, Litan added, which would include better authentication of users and a move away from passwords.

By 2007 she predicted that 75 per cent of US, and 70 per cent of worldwide, banks would no longer rely on passwords alone to protect online accounts.

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