E-banking fraud: When, not if

By RICHARD WOOD

With all the horror stories of the online world, you would be forgiven for wondering how secure internet banking could possibly be.

A case of fraud was reported this year in Australia involving its largest online bank, the Commonwealth Bank's NetBank.

No cases have been reported in New Zealand. The banks deny there have been any, and the banking ombudsman's office has not been advised of any either.

Nevertheless, e-crime experts warn it is a matter of when rather than if. Phone banking has been hit in the past, and so have ATMs.

We still use those technologies, just as we still use credit cards even though we know there has been a lot of credit card fraud.

Consumers weigh up the convenience against the risks and usually choose to go for it.

While "brute force" attempts using huge quantities of passwords to break into bank accounts online are unlikely to succeed, potential vulnerabilities still exist, such as the use of surreptitious software "agents" that record your password keystrokes, people looking over your shoulder, and the risk of human error at banks when applying for or replacing passwords.

Next time someone checks your identity by asking your date of birth and your mother's maiden name, politely point out that this information is publicly available and really a waste of time.

Chris Budge, of consultancy E-crime NZ, advises against using internet banking in places where people might watch your password entry.

He says to avoid banking at internet cafes while travelling as you do not know who owns those machines and what they have been programmed to do.

If travelling, be ready to change your password quickly if you think it has been compromised. You can authorise your bank to allow a partner to change it, or use phone banking.

Above all, keep that all-important password in your head, not your wallet, and make it complicated, with a combination of upper and lower-case characters and numerals.

You may want to use something like a phrase from a book to make it easy to remember but not possible for someone else to guess.