Internet banking risks.

Yesterday, a Wollongong man sat down at his computer and started to pay a few bills using internet banking.   He encountered a request for a " Netcode " - which he thought was rather odd - and contacted his bank, to find that scammers had his identification number and password - and were in the process of cleaning out his bank account.

That request for a Netcode was part of the bank's defensive mechanism, when they receive an instruction to transfer a significant sum of money to an " unfamiliar " account.

This customer was totally unaware that scammers had penetrated his computers defences when he had inadvertently downloaded " malicious software " contained in a contaminated email or some other innocent appearing item.   This contamination allowed the scanners to eavesdrop on every keystroke he made - garnering in account numbers and passwords.

It costs money to install a decent security system, but the risk of not doing so is enormous.  Once scammers have your vital details they can clean out not just your bank accounts, but have the information to use any credit cards registered in your name - and run up bills that you may be forced to pay.

At this stage, all the banks are making good on fraudulent loss caused by such scammers, but under the law they are not obliged to do so.   It is simply a matter of balance.  At this stage, the losses are far less than the huge profits the banks make from transaction fees - and the banks are simply protecting their own bottom line.

The biggest problem for those using internet banking is the uncertainty of just how advanced scammer technology may become in the immediate future.   We are seeing the development of sophisticated hacking gangs and should these manage a scam that produces losses running into big money there is a chance the banks may renege - and drop the losses back onto the scammed customers.

People would be wise to adopt internet banking only after they have given the risk long and hard consideration - and they would be equally wise to install top grade security software on their computer. Otherwise - their financial health is at risk !