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MPs criticise banks for not doing enough to combat cyber-crime

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Banks are failing to combat a rising wave of cyber crime, according to a group of MPs in the Commons Public Accounts Committee (PAC).

“Online criminals can target thousands of victims at the same time, causing financial and emotional harm to people and harm to businesses’ finances and reputations,” PAC said in a report.

In the year to September 2016, there were an estimated 1.9 million incidents of cyber-related fraud in England and Wales and banks are not doing enough to combat these, PAC said.

In addition, many customers are not being compensated after being the victims of financial crime.

“Somewhere between 40 per cent and 70 per cent never get their money back and banks have different policies for under what circumstances to refund money,” the report states.

Greater transparency from banks is also called for. The true extent of the problem is largely unknown, as only around 20 per cent of incidents are reported to the police.

Banks are also sitting on at least £130m that has been frozen because it is connected to fraudulent transactions. The money isn’t being returned to the true owners because it is often routed through ‘mule accounts’ that obfuscate the origin of the funds.

The PAC called for banks to use technology better to return defrauded money to customers by locating the mule accounts.

The study states: “Banks do not accept enough responsibility for preventing and reducing online fraud and there is no data available to assess how well individual banks are performing.

“Banks can refuse to reimburse customers who have been scammed and ‘voluntarily’ transferred money and shifting more responsibility onto banks for scams is likely to make them better at protecting customers.”

Barclays was recently forced to stop offering its customers a free subscription to Kaspersky antivirus over concerns that the software had been compromised by the Russian government. 

The report also hit out at the Home Office for its “slow response” to the growth of online fraud, and described the police approach as “inconsistent” across the country.

The PAC said information campaigns aimed at protecting people had been “ineffective” and under-resourced.

MPs warned that card not present fraud, where criminals use stolen card details, has doubled in five years to 1.4 million known incidents in 2016.

Despite the perception that online fraud mainly impacts on the elderly and vulnerable, the report said young people are increasingly likely to fall victim to scams due to their use of social media.

Police told the PAC: “Young people are probably more vulnerable to fraud than older generations as they have a very different approach to personal information.”

Committee chairwoman Meg Hillier said: “Online fraud is a virulent and unprecedented threat that has taken hold rapidly, causes untold misery and costs individuals and businesses billions of pounds each year.

“Banks in particular need to step up, take responsibility and focus sharply on protecting and informing their customers.

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