The internet is becoming a 'lawless Wild West' and a 'playground for fraudsters' with internet service providers and banks receiving special criticism for lax security methods, according to a report issued by the House of Lords.
The report, which was issued by the House of Lords Science and Technology Committee, said inadequate security measures among banks and internet service providers were contributing to an alarming rise in online banking fraud, which cost the UK's direct online banking industry £33.5m in 2006.
While the US is the biggest target for internet fraud worldwide -- costing its economy an estimated $2bn a year -- the report said incidences of online fraud in the UK are rapidly rising, up from £12.2m in 2004, to £23.2m in 2005 and on to its current level of £33.5m.
The study said total losses from stolen credit card details, or "card not present" fraud, had risen in the UK by 21% to £183.2m in 2005, with an estimated £117.1m attributable to internet-based transactions.
A study by the Financial Services Authority last year said identity theft cost the UK economy £1.7bn a year, with the percentage of internet-based occurrences rising steeply in the last few years.
According to the committee, which was chaired by Lord Broers, banks were guilty of "extraordinary complacency" in protecting the personal details of customers, while an investigation of an unnamed ISP found it had "the details of nearly 47,000 credit cards on sale" for £1 a time.
Among the recommendations outlined by the study include introducing a kitemark-style security approval system to regain consumer trust in internet banking; increased responsibility on the part of banks and online retailers, and for banks to be made liable for losses as a result of online fraud.
In addition, the House of Lords report calls for the Home Office to create a central hub for reporting internet crime, make it compulsory for businesses to report all data security breaches, and for criminal sentencing guidelines to automatically increase for computer-based criminality.
The report said: "The government have insisted in evidence to this inquiry that the responsibility for personal internet security ultimately rests with the individual. This is no longer realistic, and compounds the perception that the internet is a lawless Wild West.
"It is clear to us that many organisations with a stake in the internet could do more to promote personal internet security: the manufacturers of hardware and software; retailers; internet service providers; businesses, such as banks, that operate online; the police and the criminal justice system."
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