Internet Banking Fraud: Why is Online Banking so Popular?
Convenience is the key reason of why millions of people are opting
out of traditional banking for online banking. Nearly 45 percent of
the 141 million adults in America pay their bills online (according to
the Garter 2004 Survey). Banks also enjoy providing the option of
online banking because they can save on operating costs. However,
during the popularization of online banking, nearly 2 million
Americans suffered from fraudulent bank activity in 2004. Consumers
reported an average loss of $1, 200 per bank fraud. Most market
researchers attributed the increase in the number of bank frauds to
online banking.
Schemes Used In Internet Banking Fraud
Most internet banking fraud occurs in a two-step process. First,
the offender must get their hands on the customer's account
information, like their username and password. Second, the offender
will use that information to move his victim's money to another
account or withdraw it to make fraudulent purchases. For the first
step, offenders often employ one of the many popular fraud schemes to
obtain personal information. These fraud schemes include, but are not
limited to:
- "Over the shoulder looking" scheme:
involves the offender
observing his potential victim making financial transactions and
recording the personal information used in the transaction.
- "Phishing" scheme:
stems from the two words "password" and
"fishing." It entails sending email scams and mail supposedly from the
consumer's bank as a way to obtain the consumer's personal
information, social insurance number, and in this case their online
banking username and password.
- "Trojan Horse" scheme:
unfolds when malicious software
(malware) embeds to a consumer's computer without the consumer being
aware of it. Trojans often come in links or as attachments from unknown
email senders. After installation the software detects when a person
accesses online banking sites and records the username and password to
transmit to the offender. People using public computers, in places
like Internet cafes, are often susceptible to Trojans like malware or
spyware. They also are higher at risk of falling victim of identity theft.
The FBI estimates that 1 million PCs in America are being
compromised in a similar fashion to conduct fraud. Although, analysts
note that the use of Trojan schemes has jumped in the recent years,
phishing remains the most popular scheme. According to the 2004 study
by the market research Gartner, 1.8 million Americans responded to
phising emails with their personal information.
Ways to Protect Yourself
Thinking of ways to protect yourself from online banking fraud
schemes? We made it easier for you by providing information on how to detect
Trojans that appear on your PC in the form of viruses,
spyware or malware. Visit Tips for Buying Antivirus Software, How to Remove Spyware, and Is Adware Safe?pages to
become informed of the different types of software that can track your
online activities and personal information.
Also, learn to keep your cards, documents and passwords safe, and
monitor your accounts to safeguard
yourself from bank fraud committed through identity theft. Most importantly, find out how to protect your personal information to avoid identity theft from happening to you.
