Professional Documents
Culture Documents
Banking and Finance: EFT, ATMs, Internet banking (IB) and brokerage, electronic
cash, insurance
How much do you know about banking and making financial transactions online?
Before we can have an informed discussion of the social impact and ethics of e-
finance, you need to educate yourself on this topic.
Identity theft
But behind the scenes, the bank can do a lot to check you out: Are
you at your home computer, or at one with an Internet address that,
strangely, is registered overseas? Are you logging on at an unusual
time of day, or from a super-fast connection when normally you
have dial-up?
This kind of analysis is one example of the layers that bank Web
sites will add by the end of 2006 to meet new demands from federal
regulators for "two-factor" authentication. That essentially means
checking something more than just user name and password to
verify a customer's identity.
That kind of fraud detection has long existed on credit cards, and
the fact that Web banking has yet to widely deploy it says a lot
about the state of the industry.
Although identity theft and other financial fraud have garnered a lot
of attention and are believed to be getting more sophisticated,
banks have been reluctant to do anything to increase the cost and
complexity of their Web sites.
"Right now banks don't have that much security around checking
accounts," said Avivah Litan, an analyst with the Gartner research
firm.
FEAR of crime has scared thousands of people from banking over the
internet. Forrester Research, which analyses technology trends, said in
August that 600,000 online customers had gone back to using the phone
or branch network since the start of the year.
Ken Farrow, who ran the City of London Police fraud squad until three
months ago, says: 'We've had to up the ante when it comes to the
internet.'
Farrow now works for Lloyds TSB, shielding the bank and its customers
from financial crime. 'Internet-related fraud costs 12m a year, which is
nothing in the context of total fraud,' he says.
'But the villains are looking ahead. Chip and Pin technology has stamped
out some card fraud, but there is no doubt that criminals will gravitate to
other areas. We love using the web for shopping and banking, but we must
take care.'
Lloyds tested new technology with 30,000 of its regular internet banking
customers-last month. It sent them keyring-sized devices that generate
six-digit codes to be typed in alongside user names and passwords.
Because the 'keyrings' have unique codes, key-logging fraud is cut.
Anne Gunther, chief executive of Standard Life Bank, believes that most
users of online services are getting better at security. 'For the banks, it is a
never ending battle against crime,' she says, 'but we do expect customers
to take precautions, too. Most of us have passwords to prevent access to
our computers at work, but not necessarily at home. If you save your log-
on details on your computer, you are making yourself vulnerable.'
Are the dangers significant? Yes - if you are careless. Organisations will
accept liability for losses if there is genuine fraud, but not if customers
have been careless with their Pins and passwords.
Gunther makes the point that identity theft, where fraudsters use a
person's details to apply for credit fraudulently, remains a largely paper-
based crime. 'By using the internet and cutting down on the amount of
paper statements and other information that you receive, you can make
yourself more secure,' she says. 'Minimise your paper trail by shredding
what you don't need and keeping the rest somewhere safe.'
Most internet banks allow customers to view statements dating back two
years online.
Investigators say they've traced an international ATM fraud scheme to the Sacramento
area. The scam involves "skimmers" or devices placed over the front of the opening of
an ATM in order to steal financial information.
One Sacramento resident told News10 he was a victim. The man, who wanted to be
identified only as "Lloyd," said he noticed $600 in withdrawals from his Wells Fargo
account he didn't make. Some of the transactions occurred as far away as Estonia, in
eastern Europe.
Customers from Bank of America have also been affected, according to investigators,
and more than 1,000 thousand local debit card holders with Golden One Credit Union
have had their cards frozen, after possible fraud involving hijacked card numbers.
Investigators say there is an international black market for ATM information. "They
take your information, put it on a new card, and they're golden," said Lt. Bob Lozito
with the Sacramento Valley Hi-Tech Crime Task Force. "They can take that
information and have as much fun as you've got money."
Under the law, banks must reimburse customers for money withdrawn fraudulently.
Police say skimmers on ATMs may be a different color than the machine or it may
look like a box, requiring customers to swipe their cards instead of inserting them. A
customer swipes his card and then a hidden camera typically records him inputting his
personal identification number.
As use of the Internet continues to expand, more banks and thrifts are using the Web to offer products
and services or otherwise enhance communications with consumers.
The Internet offers the potential for safe, convenient new ways to shop for financial services and
conduct banking business, any day, any time. However, safe banking online involves making good
choices decisions that will help you avoid costly surprises or even scams.
This brochure offers information and tips to help you if you are thinking about or already using online
banking systems. We will tell you how to:
Confirm that an online bank is legitimate and that your deposits are insured
Keep your personal information private and secure
Understand your rights as a consumer