Internet bank fraud probe widens

Three men have been released on police bail after being arrested by officers investigating Britain's first break-in at an online bank.

The men were arrested in dawn raids by officers of the National Crime Squad on seven homes around Milton Keynes following a six month investigation into internet fraud at Egg, Britain's first online bank. The men were released without charge.

Egg said on Wednesday that fraudsters, who attempted to establish bogus accounts, stole "a handful of thousands of pounds" from the bank, in which Prudential has a majority stake.

We can confirm that our inquiries now indicate that it is possible that other internet banks ... may also have been victims of similar fraud

National Crime Squad

The National Crime Squad confirmed that other internet banks may also have been targeted.

"We are not prepared to discuss the detail of the fraud but we can confirm that our inquiries now indicate that it is possible that other internet banks ... may also have been victims of similar fraud," the NCS said on Wednesday.

Simple deception

The alleged fraud was a simple deception using fake names and addresses on multiple applications for savings accounts and loans.

Egg, which has 1.1 million customers, stressed that no money was stolen from individual accounts, and that none of its computer or security systems had been breached.

"In no way have any of our customers suffered," Gary Clifton-Marshall, the bank's operations director, said.

All banks, not just internet ones, faced the same level of security risks in such cases, Egg claims.

It was advanced software which can spot multiple applications coming from the same computer, and which Egg installed two months ago, which had led to the arrests on Wednesday, the bank added.

Other banks at risk

An NCS spokeswoman said the possibility of attacks on other online banks came to light after studying the arrested men's computers.

The squad was contacting other banks but declined to identify them.

There have been a string of security concerns about internet banking in the UK.

Last month Barclays temporarily shut its internet banking service after a fault in new software allowed some users to see other customers' accounts.

Two weeks earlier Powergen, the electricity generation firm, launched a review of website security after customers' banking details appeared on the internet.

Shares in Egg, which was launched in 1998, closed in London on Wednesday at 143.5p, a fall of 5.5p on the day.