Under Phishing Attack, British Bank Shuts Down Some Services - InformationWeek

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Under Phishing Attack, British Bank Shuts Down Some Services

The worst news is that it may only be the beginning of a new wave of banking-business disruptions.

One of the four biggest banks in the United Kingdom has taken the unusual step of suspending some features of its online service following a phishing attack.

On Wednesday, NatWest, which is part of the Royal Bank of Scotland Group and one of Britain's big four banks, shut off features to its million-plus online customers. When users logged on to the NatWest site, they saw a message that read, "We have temporarily suspended the ability to create or amend Third Party Payment mandates and create Standing Order mandates."

Third-party-payment mandates, said Caroline Harris, a NatWest spokesperson, are ad-hoc electronic-payment requests outside the normal bill payments already established. They're typically used to pay individuals electronically. Standing-order mandates are the U.K. equivalent of a scheduled bill payment.

"We've not shut down the entire site, as some press reports would have you believe," said Harris, "but we've only restricted one small part."

The phishing e-mail received by NatWest customers claimed to be part of a software update to the online banking service.

"This is only temporary," said Harris, "and is a preventative measure to protect our customers. Because we've [blocked third-party-payment and standing orders] the phishers haven't been able to take money out of customer accounts."

She reiterated that no NatWest customer had lost money to the scam.

NatWest urged customers who may have given up personal information to contact the bank, and said that alternate ways to make payments, such as by telephone, remained an option.

Although Harris said such action was "nothing new" and that the bank had done similar things before when faced with determined phishers, a U.S.-based banking analyst said it was news to her.

"I've never heard of that tactic before," said Avivah Litan, a research director and vice president with Gartner who specializes in bank fraud and phishing issues. "Not that it's a bad action, but it sounds to me that NatWest didn't have a way to contain the damage.

"It's an extreme measure. It probably means that they don't have other risk-control mechanisms in place, or the attack was getting out of hand," she added.

And while NatWest reacted quickly, there's a real chance a temporary measure like this won't stop phishers from exploiting stolen information. Increasingly, she said, it seems phishers are a lot more patient than anyone thought.

"When you look at the big picture, there's more and more evidence that phishers are sitting on the information [they steal], and that the real damage may not show up for a year or two."

Phishers, Litan went on, "are very clever, and have a lot of time and patience." Rather than use their ill-gotten information immediately -- which is what NatWest assumes by temporarily limiting on-the-fly payments -- there's growing concern that cyber-criminals wait a long time before pouncing.

One tactic phishers are using, said Litan, is to apply for new credit cards using stolen identity information, use and pay those cards, and over a period of months, even as long as two years, build up the cards' credit limits.

"Then they'll do 'bust-outs,'" said Litan. "That's when they run through the credit limit, say $50,000, before the first bill comes due, with no intention of paying."

The worst news, about NatWest's move, concluded Litan, is that it may only be the beginning of a new wave of banking business disruptions.

"Once I thought that maybe phishing was a fad, and after a while it would be replaced by some other scam, like keyloggers. But it's not a fad. It's going to get worse, and it's not going to slow down."

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