Internet fraud hits bank customer

A businessman has fallen victim to a hacker who siphoned his BNZ bank accounts over the internet after using what police believe was a "trojan horse" program to spy on him typing in his password.

Papers filed in the Auckland District Court say the bank reimbursed the Timaru account-holder $34,242.

Two Auckland-based East European students have been charged under new computer fraud legislation.

This week, Dimtri Nemkine, aged 19, of West Harbour, admitted accessing a computer system for dishonest purpose, as well as three counts of obtaining by deception.

He will be sentenced in June.

A second student, from the Ukraine, living in Greys Ave, has denied similar charges. He will appear again next month.

According to police, the pair accessed the businessman's bank account user name and password after his keystrokes were copied by a "trojan horse" program.

They then bought $34,242 worth of goods on the TradeMe website, including laptops, watches and diamond rings, paying from the bank account.

A trojan horse installs a "keystroke logger program", looking for websites visited by the user and monitoring keystrokes to discover user names and passwords.

The unsuspecting user knows nothing about the theft until he or she receives a bank statement.

Typically, trojan horse viruses can be picked up by opening an attachment to an email.

Police have consulted BNZ fraud investigators.

Detective Constable Timothy Traviss, of the CIB's fraud unit, said: "We believe this was a trojan horse, but we don't have conclusive proof at the moment.

"The bank has got concerns because of people getting passwords. They want to really know how this is happening so that they can stop it.

"They believe it was a trojan horse as well."

One of the accused claimed he obtained the user name and password from a hacker's website, but police did not believe his story.

Karl Trotter, representing one of the men, said: "The police suggest that they have obtained access by using a trojan horse-type program to obtain the user name and password.

"Potentially, this must be very worrying from the bank's point of view." Mr Trotter said banks were concerned about people logging into bank sites from public internet cafes.

Mr Traviss said this form of internet bank fraud was huge overseas but new in this country.

"If it is not the first, it is one of the first."

The police summary of facts said the students bought items from 16 sellers on Trademe.co.nz using the businessman's bank account.

When he complained, the BNZ reversed the money transfers.

The sellers were now victims of the fraud, the police statement said.

Much of the property was recovered, but goods worth $6980 remain outstanding. Reparation is sought by the BNZ and another bank that was left out of pocket when the transactions were reversed.

Several banks last night said they considered each customer claim for reimbursement of losses from internet dishonesty on its merits.

A BNZ spokesman said customers were less likely to be reimbursed if their computers lacked appropriate "firewall" security software or if they had been banking on computers in libraries or other public places.

Westpac said it generally reimbursed customers if they had complained to the police and there was no evidence they had been negligent and breached the conditions of internet banking and they were not involved in the fraud. Willingly giving someone your password was probably negligent; having it recorded without your knowledge by a keystroke-logger probably was not.

Kiwibank's reimbursement policy is similar and covers situations where the losses are outside the customer's control.

A spokesman said it had reimbursed customers who had been using internet cafe computers.

INTERNET PAYOUTS

Banks' reimbursement of customers for losses to internet theft or fraud:

BNZ: $245,000 in 26 cases over the past year.

Westpac: $160,000, mostly in the past year.

Kiwibank: About $4500, to 34 customers.

ANZ and National Bank: figures unavailable last night.

additional reporting: Martin Johnston