Online Consumer Fraud Nets Hackers $120 Million in Three Months

San Francisco, CAAccording to the US Federal Deposit Insurance Corporation (FDIC), online banking scams and online consumer fraud cost companies and individuals more than $120 million during the third quarter of 2009.

FDIC examiner David Nelson claims that online banking fraud, which typically involves the electronic transfer of funds, has steadily risen since 2007, as the malware continues to grow more common and sophisticated.

Nelson says that even though banks have increased security on their websites, customers may have become complacent with the authentication process.

"Online banking customers are getting too reliant on authentication and on practicing layers of controls," he told BusinessWeek. "Commercial deposit accounts do not receive the reimbursement protection that consumer accounts have, so a lot of small businesses and nonprofits have suffered some relatively large losses."

Nelson says hackers typically target higher funds accounts and small businesses whose security controls might not be as stringent as a major corporation.

Avivah Litan, a financial analyst with Gartner, predicts that identity theft and consumer fraud will increase in the coming years, as password-stealing botnet programs are also on the rise.