What is Internet Banking Fraud?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 17 August 2019
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Internet banking fraud is illegal activity surrounding online banking where criminals gain access to an account or person's identity and use it for financial gain. It takes a number of forms including phishing, identity theft, and the use of viruses to gain access to a person's bank accounts. People who use online banking must exercise caution to avoid obvious fraud, and should monitor their accounts with care so they can identify fraudulent activity and report it as quickly as possible.

In phishing, a criminal attempts to mislead someone into giving away confidential information, allowing the criminal to get to the person's bank account. One of the most common tactics is to send an email purporting to be from a bank, directing a customer to log in at a website in order to verify account details. People click the link in the email and reach a site that resembles their bank site, so they enter user names and passwords. The fraudster can harvest this data and use it to access online accounts at the bank's real site, draining the accounts by setting up transfers.


Identity theft is another Internet banking fraud technique, where someone assumes the identity of another person. This can allow a criminal to set up new online accounts and use them for activities like charging orders for products or transferring funds. This fraud may be more difficult to detect because the person may not be aware of the issue until the criminal racks up substantial charges and creditors come knocking to collect. Reviewing credit reports regularly can help people spot unusual or suspicious activities taking place under their names.

Viruses may be delivered through email or infected websites and allow criminals to log keystrokes and other activities on a computer to commit Internet banking fraud. They can use this data to take control of the computer, or to enter the person's online accounts. The criminal may change passwords to make it impossible to access the account while she transfers funds to a different account or incurs charges on the victim's credit cards.

Banks use a number of techniques to identify and address Internet banking fraud. These can include placing holds on unusual transactions, contacting bank customers if an account compromise appears to be in progress, and offering identity theft monitoring to people who have concerns. For consumers, some simple steps can reduce the risk of Internet banking fraud, including never giving out confidential information to someone claiming to be from a bank, personally typing in a bank's web address and checking the address bar before entering financial information, and protecting a computer with antivirus software.


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Discuss this Article

Post 1

Phishing is, thankfully, not as effective as it used to be. Why? Because the typical way to sucker someone into a fishing scheme is through a bogus email featuring a link to a site that looks official but only exists to gather confidential information form all who visit it and input data into it.

Internet service providers (ISPs) and online email providers have gotten better at flagging those emails as spam so that users never see them.

Still, the same old rule applies -- be careful about the links you click when you open your email.

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