Their Lordships Are Right: UK's Banks Should Always Bear the Risk of Online Fraud

Published by: TowerGroup

Published: Aug. 4, 2008 - 5 Pages

Table of Contents

Report Coverage

Background

Investigation of the Effects of Security Breaches

Their Lordships Are Spot On

Recommended Actions

Summary

Abstract

Report Coverage

The United Kingdom's House of Lords Science and Technology Committee has recommended a revision in the UK Banking Code to provide bank customers more protection against losses arising from Internet fraud. This TowerGroup ViewPoint analyzes the benefits of such legislation to the UK banking industry and provides advice on what banks in the United Kingdom and anywhere else should do to manage the rising tide of online fraud.

TowerGroup Take-Aways

• TowerGroup strongly supports the recommendation of the UK House of Lords Science and Technology Committee that banks assume full liability for their customers' losses due to Internet fraud.
• Banks should automatically assume it is possible that a customer's personal identifiable information such as user name and password can be compromised.
• Banks continue to adopt a wide variety of authentication techniques, but making them liable for all online fraud would increase their motivation to be as innovative in resisting fraud as criminals are in perpetrating fraud.
• TowerGroup strongly recommends that all banks adopt a risk-based authentication approach in addition to any other defenses.

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