Financial email scamming on the rise

28 Oct 2003

A new phenomenon in online scamming known as “phishing” has gained momentum in recent days with fraudulent emails being sent on behalf of major banks encouraging their customers to divulge private financial and security information.

Over the weekend UK-based bank Halifax had to take its website offline in response to the widescale circulation of fraudulent email targeting its customers, resulting in 1.5 million online bankers having to revert to traditional phone banking to manage their finances.

A statement emailed to customers of Halifax read: “In the interests of the security of our customers we have temporarily closed the online service in order that we can communicate the issue to online customers and to make improvements in the service to further safeguard online accounts. Please note that we would never send you emails that ask for confidential or personal security information.”

It is understood that thousands of customers of Halifax received fraudulent emails purporting to be from Halifax, trying to trick them into giving away confidential details, paving the way for online criminals to break into bank accounts and transfer large sums of money.

It is understood that the scamming trend known as phishing began in the UK last month when customers of Barclays, Lloyds and TSB were targeted with fraudulent emails. It is understood that as well as Halifax, customers of building society Nationwide as well as Barclays were also targeted with “phishy” emails over the weekend.

According to reports, the scam originates in Eastern Europe and emerged only in the past few months. The emails ask customers to verify their details and handover PIN numbers and passwords through a replica website.

The scam is understood to have also hit large retail banks in the US, New Zealand, Australia and mainland Europe over the past year.

The scam is understood to be part of a two-tier trick – the first element involves sending the emails and getting individuals to divulge personal account details. The second tier involves advertising for people with bank accounts to act as agents to transfer money overseas.

However, many people who receive the fraudulent emails would spot the fraud immediately due in part to the fact that because of the random nature of the emails, many of the individuals do not have accounts with the institutions that the email purports to have come from.

By John Kennedy