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Your bank doesn't care if you get ripped off

October 2, 2008

Viewing your mortgage statement ankle deep in the debris of the world's banking 'system', you may have missed this little gem, but PC Advisor today reported that UK losses from online banking fraud hit £21.4m in the first half of this year.

Don't panic. According to the UK payments association APACS, the figures "need to be seen in the context of increasing numbers of online retailers and ever-growing numbers of online transactions". It's a fair point: given the vast amounts of cash that swill around the world online and off-, a mere £43 million quid a year is no big deal.

But it is, to me at least, a huge amount of money. And it's a sick amount of money to write off.

As is becoming only too obvious, our cash-free, financial system revolves around the old capitalist conundrum of risk versus reward. The short-term reward to banks of doling out credit without due concern is huge, the risk judged to be less so. (They may be rethinking that right now.)

Online banking offers convenience unparalleled, making money (both yours and the bank's) available at the click of a mouse. (Check out the post-pub activity on my Bet365 account for further evidence of this.)

As Eugene Kaspersky, no less, told me the other day: "Banks don't incentivise staff to prevent fraud, they are encouraged only to limit the losses." Or to put it another way, financial institutions accept the loss of some money to online fraud as (adopts 'Porridge' judge voice) an occupational hazard. They make more than enough to cover their losses by making it ultra easy for punters to access services.

And they've got it made. Businesses need banks, so guess who makes the rules? The costs of the majority of fraudulent credit and debit card transactions, for instance, are passed back to the merchants. And because the great unwashed pays only in increased prices and insurance quotes, we tend not to notice this happening.

Until, that is, our own accounts are hacked and ripped off. And even then, most of the time the experience is relatively benign. You get a statement, get a shock, call the bank (heart pounding), and are told not to worry. The money reappears.

But technologies such as Chip and PIN, and hardware password generators, devolve increasing amounts of responsibility to the end user. Give up your PIN, and you're to blame.

Even now you have to be quick to spot fraud - fail to notice a problem with your account for long enough and you may be made to carry the can. Either way, it can ruin your credit rating, which will cost you a fortune in the long run anyway.

It's time the banks faced up to the issue, and reduced the risk we all take with every transaction. There's a lot more that can be done, and is done elsewhere in the world (in Croatia, for instance, people have to combine their own passwords and codes with numbers taken from a codebook. Like spies.)

It would, of course, be annoying to have a less convenient online banking system, but not as annoying as its going to get if online crime is allowed to grow at the pace it has done to date.

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Posted by: Matt Egan

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Comments

Posted by Roger on October 2, 2008 :

Fraud crimes will get worse deter.

This KEY and PIN system could be treated like international ID card since it will personalise signature and PIN to the right individual in any country in the world.

To protect the public and entire business industry from becoming victims of fraud government and banks should act now and exploit proposed system before it is too late to stop a fraud crunch which will be far worse than credit crunch.

Posted by Roger on October 2, 2008 :

Fraud crimes will get worse until banks make signature and PIN systems reliable as proposed on website www.xwave.co.uk
This system will also eliminate the need for us to protect our personal an card details since fraudsters will not be tempted to misuse these stolen details.
This KEY and PIN system could be treated like international ID card since it will personalise signature and PIN to the right individual in any country in the world.
To protect the public and entire business industry from becoming victims of fraud government and banks should act now and exploit proposed system before it is too late to stop a fraud crunch which will be far worse than credit crunch.

Posted by The watcher on October 2, 2008 :

stick it under your bed!

Posted by Dull Watcher on October 2, 2008 :

Dullard. Give it up.

Posted by Roger is a Roger on October 2, 2008 :

We have just been screwed for trillions of bucks by our bankers and still assholes like Boger point the finger at honest villains simply because they nick a fistfuls of dollars.

People like this blinded rear sucking weasel allow and excuse the scum which run our societies.

Swallow yourself up please.
Or shut the fuck up you simpleton.

Posted by Roger my Raja on October 2, 2008 :

I see that our xwave boy = Yogesh Raja (Executive Director)

Visual Security International Limited , Aylesbury.

Would rather have a Rioja instead.

Posted by rogan josh on October 2, 2008 :

Nice research very hot shot.
This place is one hell of a hovel.

Posted by P. Waters on October 3, 2008 :

Time was we used banks because they provided physical security for our money. Just what are banks doing for us these days? Surely this is a service our tax dollars should pay for?

Posted by Condom on October 3, 2008 :

I bank with Lloyds TSB and they left me stranded twice at Bangkok Airport without any means of obtaining money despite me advising them in advance that I was going to Thailand. Despite me complaining it happened twice more. Their excuse was that the ATM rejected all my cards because Lloyds could not authenticate who I was despite me entering the correct card and PIN number. It seems that unless you can prove who you are to an ATM machine it rejects you. The matter is now witth the Ombudsman as even numerous letter to the Lloyds TSB Chairman got no proper response on one isssue and a stoney silence on the other.

Posted by Mike Pludek on October 6, 2008 :

I whole heartedly agree with the comments in the article. The banks have got away with robbery for far too long either through their own negligence or false charges. If they had been a highstreet trader they could have been prosecuted under the act of fair trading as a bank they cannot.

Posted by Jim on October 18, 2008 :

The chip and pin system is rubbish, it just gives the banks an excuse not to pay out if you are ripped off because they can claim you gave up your pin number.
It makes me laugh to see so many people putting their pin numbers into the machine without covering up the keypad so how can we get around it?
In certain parts of spain, you enter your pin, if the pin is ok then you sign, they then check the signature on the receipt to the one on the card and then against your passport, driving licence or identity card.
Takes 10 seconds, i'd be happy to see that here rather than spend hours on the phone complaining to a bank that my money has been stolen!!!

PC Advisor staff
Blogger Daily news, views and thoughts from the PC Advisor staff as they put together the magazine. Collectively the PC Advisor team has over 100 years of computing experience, so as you'll imagine they're never short of an opinion or two.
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