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Lost child benefit discs to cost banks £250m

Banks counting the cost of UK data breach

Last week's loss of computer discs containing bank details and other personal records for 25 million people could cost UK banks £250m, according to research firm Gartner.

Gartner analyst Avivah Litan said that's how much banks will have to fork out to secure people's accounts by closing and reopening them in an effort to prevent ID fraud. The figure is based on a conservative estimate of £10 per account.

HM Revenue & Customs last week disclosed that it had lost computer discs containing large amounts of confidential information, including names, addresses, dates of birth and bank account information belonging to nearly a quarter of the country's population.

The huge media attention the breach has received makes it much more likely than normal that the stolen data could actually get misused, Litan said. As a result, UK banks are also much more likely to take emergency measures to mitigate that risk.

Heightening the concern is the fact that fraud resulting from compromised bank account information is often harder to detect than payment card fraud, Litan said. Typically, bank account compromises can result in account hijacking or so-called automated clearinghouse fraud, where a data thief uses compromised bank account and routing numbers to initiate payments from a customer's account to his own, she said.

Detecting such transactions can be hard, especially given the scale of the recently disclosed breach, Litan said. At the best of times, "probably the system with the weakest protections against fraud is the account transfer system" between banks, she added.

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