British banks still failing to protect customers from ID theft

Posted by Kirstie Brown in Identity Theft on 27 October 2016 - Kirstie is a Senior Credit Analyst at checkmyfile.

Consumer group Which? has today criticised some of the biggest banks in Britain for failing to invest in security systems that would better protect their customers from fraudulent activity. This criticism comes as a result of a 64% increase in online banking fraud last year alone, with losses of £133.5m. Fraud for phone banking rose 28%, with losses of £323.3m.

A test of 11 High Street banks found that only five have adopted the more rigorous two factor security checks which combine something the individual knows such as a PIN or password, with something you have to hand, such as a card reader or mobile phone. These banks were First Direct, HSBC, Barclays, M&S and Nationwide.

Volunteers who held current accounts at 11 banks were asked to carry out a number of tasks, which were rated by security experts. These tests included account management which covered setting up a new payee and transferring funds, changing personal details, encryption and navigation as well as logging in and out of the site. The experts also checked whether each site prevents the customer from using the ‘back’ button to access previously secure sessions, as well as whether two sessions were allowed to be open simultaneously on two different browsers or devices.

While all the banks tested conduct additional checks before money can be transferred, hackers can gain access to sensitive information if they can penetrate the first level of security. They can then use this information to win their victims’ trust and trick them into transferring money.

Lloyds Banking Group, which includes Bank of Scotland, Lloyds and Halifax – as well as Royal Bank of Scotland and sister bank NatWest did not have the two-step log in, although Which? said that all of the banks’ logins were broadly secure.

In September, Which? used its super-complaint powers to call on the financial regulator to investigate whether banks are doing enough to protect people who are tricked into transferring money to a fraudster. Too often, fraud victims are not being refunded by banks and in some cases have lost in excess of £100,000.

Alex Neill from Which? Home and Legal, says, “The best banks in our test manage to use two-factor authentication without it being too onerous for their customers, so there’s no excuse for others to sacrifice security. Online banking is increasingly part of our daily lives and at the same time online scams are becoming more sophisticated. People can only do so much to protect themselves from fraud. It’s time for banks to shoulder more of the responsibility and introduce extra protections to safeguard their customers.”

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