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Your bank doesn't care if you get ripped off

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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