Monday 18 December 2017

New research shows the cost of financial fraud to consumers

Financial fraud a major problem for firms
Financial fraud a major problem for firms

Cara McGoogan

Online financial services and lending companies are increasingly being targeted by fraudsters and costing consumers millions of pounds around the world last year alone, according to research.

Cyber attacks against online lending companies and alternative payment systems increased 122pc last year, according to ThreatMetrix, a security company that monitors more than £20bn(€23.5bn) online transactions a year.

The fraud is estimated to have cost consumers as much as £8bn in 2016, the company said.

The spike in fraud comes as online financial services are growing in popularity. A combination of greater trust and ease of use means customers are increasingly opting to use digital businesses. In the UK, financial services transactions online grew by 10pc last year.

But this uptick has made the industry a prime target for cyber attacks, ThreatMetrix said after detecting 80m attacks on the financial sector using fake or stolen credentials in 2016.

"Due to its surge in popularity, and fast transaction cycles, online lending has become a prime target for cyber criminals," said Vanita Pandey, vice president of strategy at ThreatMetrix. "Online lenders are under increasing pressure to adopt smarter authentication methods to accelerate genuine loans and prevent fraud."

The most common crime in the UK spotted by the researchers was identity theft using data stolen in high-profile breaches, such as those against Yahoo and LinkedIn. ThreatMetrix said the majority of fraudulent attacks appear to have originated in developing countries including Brazil, Egypt, Ghana, Jordan, Nigeria and Macedonia. 

As cyber crime becomes a regular challenge for businesses, separate research from Timico has revealed the scale of damage ransomware attacks can inflict on British companies.  

A survey of 1,000 companies who have been victims of a ransomware attack, when cyber criminals lock all the files in a system and demand payment, revealed such breaches on average knock systems down for a full week, costing up to £2,000 a day in lost revenue.

Of the affected businesses, more than 250 paid over £5,000 for the safe return of their data. One third couldn't access their information for a month after the attack, while 15pc said it was never recoverable. 

"These research findings clearly show that the speed of a ransomware attack is almost instant, while the effects on the organisation can be far reaching," said Nabeil Samara, chief digital officer at Timico.

"It’s critical that all organisations, no matter what size, acknowledge the increasing and evolving threat of ransomware as attacks become ever more frequent and instil a policy, that is regularly updated, to educate staff on what to do if the business comes under attack."

Telegraph.co.uk

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