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Corporate spies are using covert JavaScript code within email to track the contents of sensitive financial communications.

That's the warning from managed service provider Activis which said that it is seeing increasing use of malicious JavaScript coding to create Web bug that spy on Internet traffic.

These Web bugs can be embedded into HTML based emails before they are sent. The code then acts to covertly copy the original sender each time this email is forwarded on within the recipient's system.

The issue has been well known within the security community since February, when online watchdog the Privacy Foundation highlighted the problem. Activis says it is a live threat that is been actively exploited. It picked up the trend in the course of providing content management services for its clients.

Despite the bleak picture painted by Activis the situation is far from hopeless. It is possible to eradicate 'e-wiretapping' via Web bugs by installing email encryption software, or turning off JavaScript in HTML messages.

The advice is timely because there is evidence that businesses do not take email security seriously enough, despite conducting more and more sensitive business negotiations over the Net, chiefly because it greatly speeds up discussions.

A recent report on email security within mergers and acquisitions, published by IT services company Northgate Information Solutions, found 100 firm out of 500 sent 70 per cent or more of confidential information via email. Despite this, only 11 per cent of the total sample said that they had secure, encrypted email. Lawyers, who really ought to know about the need for confidentiality, were the worst offenders with only eight per cent insisting on using encrypted emails when sending confidential information to external parties. ®

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