The Dangers of Internet Banking: Security Risks and Consequences

Internet banking has become a convenient way to manage our finances, but it also comes with its own set of risks. Phishing scams are a common threat, where hackers trick victims into revealing sensitive information.

Malware is another security risk, which can be downloaded onto your device through infected software or websites. This can compromise your login credentials and allow hackers to access your account.

Phishing scams can be particularly sneaky, with scammers sending emails that appear to be from legitimate banks, asking for sensitive information. In 2020, a study found that 45% of online banking users had received a phishing email in the past year.

Malware can also be used to steal your login credentials, which can be used to access your account and make unauthorized transactions. In one notable case, a malware attack on a bank's system resulted in the theft of $10 million from customer accounts.

Consider reading: Virtual Bank Account

Phishing is a common tactic used by fraudsters to trick individuals into sharing their personal information through fraudulent emails that appear to be from legitimate financial institutions.

These emails ask for confidential information such as usernames, passwords, and account numbers.

Cybercriminals can intercept and redirect legitimate e-transfers intended for a victim's bank account to their own account using tactics like social engineering, malware, or hacking.

Application fraud occurs when cybercriminals open bank accounts in the victim's name without their consent, using stolen identities and other fraudulent documents.

Here are the top 10 most common types of online frauds in banking services:

Note: This list is a summary of the top 10 types of online frauds in banking services mentioned in the article.

Malicious software, also known as malware, is designed to infiltrate or damage computer systems. Malware can be used by fraudsters to gain unauthorized access to your net banking credentials.

Malware can be downloaded onto your device simply by scanning a QR code in public, or by downloading an app that's infected with a keylogger. Keyloggers record all the information you type into your phone, including bank accounts and passwords.

Phishing is a common tactic used by fraudsters to trick individuals into sharing their personal information. This is usually done through fraudulent emails that appear to be from legitimate financial institutions.

Phishing emails may look just like mail you're used to receiving from your bank, and the sender could even spoof the "from" name to look like it's legitimate. However, if you click on the link in the email, it will take you to a site designed to steal your information.

Banks will never request sensitive data, such as social security numbers or PINs, via email, text messages, or phone. If anyone reaches out to you claiming to be from your bank, don't engage with them.

Here are some common phishing tactics to watch out for:

By being aware of these tactics and taking steps to protect yourself, you can reduce the risk of falling victim to malicious software and phishing scams.

Identity theft and data breaches are two of the most common forms of Internet banking fraud. Identity thieves can steal your personal information to impersonate you, and this can happen even if you're using a secure banking app.

According to the 2021 State of Mobile Finance App Security report, 77% of mobile banking apps have at least one security vulnerability that could lead to your personal data being leaked. This puts you at risk of not only financial fraud but also identity theft.

Scammers can use stolen personal data on the Dark Web to take out loans in your name, open new credit cards, and ruin your credit score. They can even steal your tax refund.

Data breaches occur when cybercriminals exploit website or system vulnerabilities to gain access to sensitive information. A bank may experience a data breach if they don't prioritize cybersecurity.

If an app, bank, or financial institution that you use gets breached, there's a good chance that your information – including banking details and your Social Security number – will be available to hackers on the Dark Web. The Central Bank of Florida reported a data breach in March, and many victims are still reeling from the effects of the 2019 Capital One breach that leaked the personal data of 100 million customers.

Intriguing read: Online Banking & Mobile Banking

Here are some potential risks of a data breach:

It's essential to be aware of data aggregators that third-party apps use to interface with bank apps. Data aggregators collect your personal data and sell it to other companies, and only 24% of people who use fintech know about this arrangement.

Your phone is a treasure trove of sensitive information, and scammers can steal your money remotely even without having access to your physical phone. Hackers have created malicious software that attack bank apps, so be wary of downloading malware onto your phone.

To protect your mobile banking app, regularly update your device's software, as developers often release "hotfix" updates to address major issues. Install these updates as soon as possible to ensure your app is secure.

Some mobile banking apps offer robust safety features, such as encryption, frequent software updates, and biometric authentication. However, using public Wi-Fi networks can put your banking information at risk, so consider using a VPN to encrypt your connection.

Additional reading: Online Banking vs Mobile Banking

Here are some essential security measures to take:

By taking these precautions, you can significantly reduce the risk of your mobile banking app being compromised.

SIM Swap is a type of e-banking fraud that can be a nightmare for mobile banking users. A scammer can trick your mobile service provider into transferring your phone number to a SIM card in their possession, allowing them to bypass two-factor authentication measures.

This type of scam is often carried out by impersonating you or paying a mobile carrier employee. Once they have your phone number, they can receive your texts, calls, and other data. This is usually all it takes for scammers to reset your banking app password and bypass 2FA.

SIM swaps can cost victims a significant amount of money, with the FBI reporting that they cost victims more than $68 million in 2021. In one recent example, a Florida man lost more than $700,000 in a matter of hours after being the victim of a SIM swap.

It's essential to be aware of this type of scam and take steps to protect yourself, such as keeping your phone and account information secure.

Unauthorized access to your device can put your mobile banking app at risk. Someone could steal your phone and access your account.

If you save your account passwords on your phone or stay logged into services like your email accounts, a scammer can bypass all of your banking app's security features. This is especially true if you save your passwords in your mobile browser or notepad, don't lock your phone, and don't use biometric security.

A scammer could request a new password for your bank app and access it through your email. They can then bypass the protection of your multi-factor authentication code when it's sent to your phone.

Here are some ways to prevent unauthorized access to your device:Set a secure passcode or use biometric ID, such as fingerprints or facial recognition.Set your phone to lock automatically when not in use.Stay logged out of your banking app at all times.Use a password manager to securely store your passwords.

SIM swaps are another type of unauthorized access. This occurs when a scammer tricks your mobile service provider into transferring your phone number to a SIM card in their possession. Once they have control of your phone number, they can receive your texts, calls, and other data.

According to the FBI, SIM swaps cost victims more than $68 million in 2021. In one recent example, a Florida man lost more than $700,000 in a matter of hours after being the victim of a SIM swap.

For another approach, see: Joint Bank Account

Banks take internet banking security seriously, but customers must also take steps to ensure their online bank security.

Always be wary of bank emails that request personal information or direct you to a website—banks will never request sensitive data.

Avoid clicking email links purporting to direct you to a bank’s website—instead, type the web address directly into the browser and ensure that you are on the bank’s legitimate, secured site.

Use antivirus software for additional security in banking, and keep this up to date.

Protect your online banking sessions by using a virtual private network (VPN).

Enable multifactor or biometric authentication if the bank offers this.

Use one-time passwords to validate transfers, payments, and changes.

Regularly monitor account statements for suspicious activity such as unauthorized charges or transfers, and report these to the bank immediately.

Report lost or stolen cards to the bank immediately.

To keep your mobile bank app secure, follow these best practices:

Here are some key security measures to protect your online banking:

By following these tips and security measures, you can protect your bank account from fraudsters and keep your online banking secure.

To stay safe while banking online, use strong and unique passwords for your online banking accounts, and update them regularly.

Create passwords that are at least eight characters long and include a combination of uppercase and lowercase letters, symbols, and numbers. Avoid using easily guessable passwords like birthdates or name-surname combinations.

Enable two-factor authentication (2FA) to add an extra layer of security to your online banking accounts. This typically involves using something you know (such as a password) and something you have (such as a fingerprint or an OTP sent to your mobile) to verify your identity.

Be cautious with emails and links, especially those asking for personal information or urging you to click on suspicious links. Always verify the authenticity of emails and links before providing any confidential information.

Keep your computer, mobile device, and software up-to-date with the latest security patches. This helps protect against known vulnerabilities that cybercriminals may exploit.

Avoid conducting online banking transactions on public WiFi networks, as these networks may not be secure and can be easily intercepted by hackers.

Regularly review your bank statements and transaction history to detect any suspicious activity. Report the bank immediately if you notice anything unusual.

Use antivirus software and keep it up to date to protect your devices from malware and other online threats.

Here are some additional security measures you can take:

Using a mobile banking app doesn't guarantee complete security, despite its advantages over website banking. Mobile bank apps transmit data between your device and the bank's server, giving hackers three access points to potentially breach your data and account.

These vulnerabilities include your device, the data in transit, and the bank's server. It's much harder for scammers to pull off phishing scams when you're using an app, but it's not impossible.

Here are the three main vulnerabilities that can put your bank account at risk:

If you accidentally open a phishing email, it can lead to serious consequences. Cybersecurity experts recommend following a step-by-step guide to stay safe, but unfortunately, no such guide is provided in the article section examples.