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Peers call for cybercrime shakeup (again)

Say banks should pay for fraud

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Peers are calling for a reversal of rules that stop UK victims reporting cybercrimes directly to the police. The House of Lords science committee is also encouraging the government to introduce a data breach notification law.

A follow-up report on personal internet security by the committee of peers also calls for legislation to ensure that banks are held responsible for losses caused as a result of electronic fraud. The three recommendations are the main findings from a second round of hearings on the issue of internet security carried out by the peers.

The government failed to take on board the recommendations that came out of the peers' first set of hearings last year, but the fallout from the HMRC data loss debacle has brought the importance of internet security into focus for government ministers, two of whom appeared before the committee during its second round of hearing.

Round two

Security experts criticised government officials for ignoring recommendations in the initial report, published last August. Since then, and after the November data loss by the HMRC, ministers took on board some of the proposals, including moving towards a code of conduct for ISPs and kite-marking websites.

These were some of the minor points in the initial report. Disagreements remain on cybercrime reporting and the liability of banks for online fraud.

Their Lordships' second report renews a call for the government to do more to protect the public from cybercrimes such as identity theft scams and auction fraud.

The government maintains that the Banking Code offers enough protection for customers. The latest House of Lords report argues that banks often refuse to refund customers in cases where a PIN or password is used in an online fraud.

The committee heard evidence that the Financial Services Ombudsman and the courts are unable to offer redress from customers in these circumstances, prompting the Lords to argue that laws need to be enacted that push the balance back in favour of the consumer. Holding banks statutorily responsible for phishing and skimming fraud would encourage them to improve e-commerce security, peers argue.

Richard Clayton, a computer security researcher at the University of Cambridge and expert advisor to the committee, backed this recommendation: "Banks choose the security mechanisms and how much effort they put into detecting patterns of fraud, so they should stand the losses if these systems fail. Holding individuals liable for succumbing to ever more sophisticated attacks is neither fair, nor economically efficient."

The Committee's second report, published on Tuesday, also repeated its call for an overhaul in e-commerce reporting procedures. It stated that requiring victims of fraud to report it to their banks rather than to the police is leading to under-reporting of e-crime.

"It is also vital that the victims of e-crime can report crime directly to the police. If you were robbed in the street you would expect the police to recognise it as a crime and try to catch the person responsible. If you are a victim of online fraud, you should be entitled to the same protection," said Lord Sutherland of Houndwood and chairman of the Lords Science and Technology Committee.

The Committee's Personal Internet Security: Follow-up report can be found here (pdf). ®

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