'Phishers' net £60m from online bankers

Online bankers in the UK are warned to be vigilant of e-fraudsters in a fresh police crackdown on the multi-million pound scam of "phishing".

Police say three financial institutions lost £20 million each to internet crime over the past year and the number of "phishing" cases has increased 600 per cent in the last 12 months.

Banks that have been hit include Halifax, Barclays, NatWest, Lloyds TSB and HSBC.

Phishing involves mass-sending e-mails - or "phishing expeditions" - directing recipients to a websites make to look like their banks' front pages.

The sites are exact copies of the originals - many are set up by sophisticated criminal gangs often in Eastern Europe.

The fraudsters hope to hook the customers before prompting them to disclose personal account details.

This information is then taken to the real online site where money in the users' accounts is redirected to a number of other accounts before eventually falling off the traceability radar.

'Everyone suffers'

The police warn the loss to UK businesses and banks is in the billions as they must reimburse customers who have been defrauded.

Halifax Bank last October had to shut down its online banking facilities temporarily after it was cloned and a "phishing expedition" launched by e-mails directing customers to the fake website. The scam was traced to Russia.

Mark Hemingway, spokesman for Halifax said: "They keep trying it and if you supply this information you are effectively giving the keys to your account. That is why we took the site down and contacted all our customers."

Detective Chief Superintendent Len Hynds, head of the National Hi-Tech Crime Unit (NHTCU), told an e-crime conference in London this week that cases of phishing had increased from seven in 2002 to more than 50 in 2003 - and the criminals were getting more sophisticated.

He said online bank customers must be aware of the dangers.

"If you receive unsolicited e-mails inviting you to visit an online bank and put in your name and password, simply don't do it," Mr Hynds said.

"No bank will invite you to do that. It can be very credible and they look just like the real thing.

"We have seen a marked increase in the intelligence and evolution of that kind of crime."

David Aucsmith, chief technology officer for Microsoft's security business and technology unit, told the conference: "Fake websites seem to be much more common than they were a year ago.

"They are definitely on the rise."

Confidence fear

The conference, involving police, government and businesses, also heard that cyber-crime was costing UK business billions of pounds through virus attacks, hackers, extortion and fraud.

A survey by NHTCU of 201 British firms revealed 83 per cent had experienced hi-tech crime last year - costing them £195m - with 15 per cent suffering from phishing attacks.

Financial fraud was suffered by 62 per cent and three firms from the financial sector had lost £20m each. The survey heard that less than one quarter of companies in the survey even reported e-crime to police.

Within the financial industry there is a reluctance to admit banks have been hit by internet crime for fears customers will stop using online banking or switch to a competitor.

Mr Hynds said companies which were being attacked were now being more open with the police in sharing information, investigating attacks and building strategies to counter them.

The steady growth of banks offering services on the internet has proved to be a magnet for criminals, insiders say.

It is far cheaper for banks to close branches on the high street and go online with estimates there will be 84 million internet banking customers in Europe by 2007.

If customer confidence is crippled by such scams the whole industry could be affected, experts say.