Why does online banking fraud happen?
Although internet banking has been around since 1981, it didn’t become widely used or popular until the late nineties and early noughties which is why online banking fraud didn’t really take off until circa 2004.
The popularity of online banking is generally due to its convenience for both user and the bank as it is more efficient for both parties and cuts out the need to personally visit the bank to make transfers or payments. But, benefits aside, with internet banking comes the inherent risk of online banking fraud. As users weren’t initially aware of the risks of online banking and weren’t protecting themselves accordingly, scammers have taken advantage of the opportunities to target unsuspecting victims. This is why many people have fallen victim to online banking over the years, leading to a steady incline of internet banking fraud.
Internet banking is now used by 7 out of 10 people, according to the Financial Times, correlating a surge in mobile banking to the doubling of online bankers in the last decade. This trend answers for the increased opportunities for internet banking scams, which is why online banking fraud is so common today.
What is online banking fraud?
So, how do online banking scams differ from other forms of bank fraud? We broke down the three key types of bank fraud in a recent blog post, but these aren’t all unique to online banking. Most types of online banking scams follow a similar process where the scammer finds a victim’s account details and uses this to transfer money from the victim’s account into their own or to make their own payments. But how do fraudsters get hold of this information to begin with? There are three common ways in which this is done:
In this instance, the scammer targets computers with malicious software which usually comes in the form of links or attachments from unknown email senders. 92% of malware is delivered by email, according to Alert Logic. If the recipient clicks on the link or opens the attachment, they unknowingly permit harmful software to install on their computer. This software then records any personal information entered into banking sites.
To get a victim to hand over their personal data, the fraudster sends email scams impersonating the victim’s bank, asking for information for verification purposes. According to Propeller, an increasingly popular method of phishing is by targeting Dropbox, which gets a 13.6% click rate from victims.
‘Over the shoulder looking.’
In this situation, the fraudster watches victims in everyday situations when making financial transactions. For example, inputting their pin at a cash machine, giving card details over the phone, or purchasing an item online in a public place. Using the details entered, the scammer makes a record of them and uses them fraudulently.
As previously mentioned, the increase in online banking use naturally gives way to many opportunities for internet banking scammers. And while individuals haven’t always been able to protect themselves appropriately, this is only becoming more difficult as scammers become more skilled at crafting campaigns. Worryingly, a staggering 97% of people are unable to identify a sophisticated phishing email.
If you have been targeted by online banking fraud, it’s worth familiarising yourself with how the bank fraud investigation process works. If you believe you are being investigated due to allegations of internet banking fraud, please get in touch with our experienced fraud barristers who are highly skilled in defending and prosecuting in banking and insurance fraud.