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Police target online bank fraud
LONDON -- Three men have been arrested by British police after an investigation into attempted robberies of online banks particularly the Internet financial services group, Egg.
Police said the men were arrested in a swoop on their homes north of London.
The raids were the result of a six-month investigation into Internet fraud against Egg, one of Britain's highest-profile online banks with about 1.1 million customers.
Police said they found possible evidence of attacks on other online banks during their investigations and were contacting them.
Egg confirmed it had been the target of a fraud sting on Wednesday but said its security systems were never breached and that no money was stolen.
But police insisted Egg had lost money and said it amounted a small sum, in the thousands of pounds.
A source familiar with the case said a gang was thought to have made multiple, bogus applications for loans and savings accounts.
Police said Egg had raised the alarm, prompting a six-month investigation that culminated in Tuesday's arrests.
Egg confirmed "fraudulent applications" had been served on the bank but neither Egg nor the police would elaborate.
Egg said it had worked with police to develop software to trace the gang.
Customers' money is 'secure'
"This software was installed two months ago and directly led to the arrests we are hearing about today," Egg spokeswoman Poppy Nagra said.
"At no time has Egg security been breached and absolutely no money has been fraudulently obtained through this activity."
Prudential, Egg's majority owner, assured customers on Wednesday that their money was safe: "We confirm Egg's security remains unbreached and customers' money is secure."
National Crime Squad officers made Tuesday's arrests in an early-morning raid on seven homes within a tight radius around Milton Keynes. The men arrested were in their 30s.
Officers confiscated computer equipment, documents, cash and drugs during the raid, a police spokeswoman said.
The three were released on bail on Wednesday without being charged. A National Crime Squad spokeswoman said the case highlighted a new and alarming phenomenon -- organised crime on the Net.
"These criminals had used the Internet in order to commit this crime," said spokeswoman Judi Prue.
"This obviously is a very new area criminals are getting into and expanding into, so it's something in which we have really got to keep one step ahead of them."
The break-in follows a string of security concerns about Internet banking in Britain.
In July, Barclays briefly shut down its Net banking service after a fault in new software allowed some users to see other customers' accounts.
A report issued in August after the Barclays incident highlighted the dangers in e-commerce.
Britain's National Consumer Council said online shoppers were nervous about releasing credit card and personal details on the Web.
Internet analyst Mamoun Tazi, of investment bank Schroder Salomon Smith Barney, said investors in e-commerce stocks were nervous about online security.
"This is not the right time for this to happen," he said.
Online banks were in a race to stay ahead of criminals as both sides obtained more and more sophisticated equipment. "It will be an ongoing affair between the banks and the hackers."
In recognition of the challenges posed by cyber-crime, law enforcement agencies around Europe are looking at sharing information and resources to fight high-tech criminals across a common front.
Reuters contributed to this report.
Online identity theft a growing concern
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