Losses to online banking fraud have reached a record high, figures published today have revealed.

The amount of money lost to internet fraudsters specifically targeting banking customers rose by an alarming 185 per cent in the first six months of 2008 because of an increase in phishing attacks and spyware scams, according to Apacs, the payment industry association.

The number of phishing incidents - where fraudsters replicate banks' websites to dupe customers into inputting their account details - has quadrupled in the last two years, from 5,087 in the first half of 2006, to 20,682 now. Total losses for the banking industry were £21.4 million pounds from January to June, up from £7.5 million in the same period in 2007.

Banking customers were urged to be extra vigilant, as scammers become increasingly sophisticated and phishing websites become more and more convincing.

An Apacs spokesman said: "Phishing scams have grown a lot more convincing and sophisticated. Two years ago, they were easy to spot because they were littered with spelling and grammar mistakes. Now, the websites really do look like the real thing."

Apacs added that there is mounting evidence of a growing reluctance among banks to refund customers in cases where they have fallen victim to phishing scams, so customers are having to bear the cost of the losses themselves.

Under current guidelines, as long as a customer is not negligent or fraudulent, then the bank must offer a refund. However in a growing number of cases, banks, which bear the cost of rising fraud, are arguing that customers who handover their details to a phishing website are guilty of negligence, giving the bank grounds to refuse refunds.

The Apacs spokesman said: "We are seeing some banks increasingly adopting the tactic of not refunding on the grounds that if they go to great lengths to warn the customer about phishing attacks, then it is the customers fault if they are caught out."

Credit card fraud also reached a record high in the first half of this year, with losses up 14 per cent to £301.7 million. Apacs attributed this rise to an increase in card fraud committed abroad in countries where chip and pin is yet to be introduced. Fraud losses abroad have risen by 190 per cent in the last three years to £121.2 million. Fraud committed in face-to-face transactions in shops rose by more than a quarter to £47.4 million, while cash machine fraud rose by 22 per cent, after declining year-on-year since 2004.

Apacs said the increase in online, phone and mail order shopping fraud, know as "card-not-present" fraud, should be seen in the context of the proliferation of online retailers, and the even greater increase in the number of people now shopping online. For instance, between 2001 and 2007, this type of fraud rose by 204 per cent, compared with a 415 per cent increase in online shopping card transactions.

Fraud on lost or stolen cards was the only type of fraud to fall this year, coming down from £30.7 to £27.3 million from the same period last year.

Sandra Quinn, a director of Apacs, said: "To help tackle online fraud, we continue to urge shoppers to protect their computer with up-to-date anti-virus software, only use secure websites and register with Mastercard SecureCode and Verified by Visa when prompted."

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