New body to tackle rise in online banking fraud

The banking industry has set up a group to combat the growing threat of online banking fraud such as "phishing".

The High Tech Fraud Forum has been established by the Irish Bankers Federation (IBF) in response to the increasing frequency of phishing attacks, in which fraudsters attempt to con consumers into revealing personal log-on information by directing them to hoax websites.

IBF banks, representatives from the Garda Síochána and the Irish Payment Services Organisation (Ipso) held a preliminary meeting last month to discuss an industry-wide strategy for combating the fraud, which threatens to reduce the appeal of online banking for consumers. The first official meeting will take place later this month.

Bank of Ireland has refunded several customers who were swindled out of €160,000 as a result of a recent phishing scam.

But the bank issued a statement yesterday saying it had issued the refunds only after reviewing each of the cases and only on the "exceptional" basis that phishing was not widely understood by the customers. The bank said its official policy was that it will not refund the victims of phishing attacks because it is the customer's responsibility to keep personal log-on information private.

A spokeswoman for the Irish Financial Services Regulatory Authority said it had no comment on banks' policies on compensating customers for phishing.

"Fraud is a criminal offence and we would say it is a matter for the Gardaí. The bank must have proper systems and controls, but often the weakest link is the consumer themselves."

There are no figures showing how much phishing costs Irish banks, but the UK Association of Payment and Clearing Systems estimates that it costs British banks €17.5 million a year.

It is thought that the IBF forum, which will include members of the Government's Internet Advisory Board and the Internet Service Providers Association of Ireland, will also examine the threat of a newer type of fraud in which spyware is used to infiltrate computers and surreptitiously record the combinations of keystrokes consumers use to access online accounts.