Conducting payment or banking transactions through telephone or internet channels provides great convenience to users, which an increasing number of citizens are enjoying. Generally speaking, these payment channels are safe and reliable. But the service is susceptible to fraud if users do not protect their passwords adequately.
As an analogy, passwords for accessing your internet or phone operated payment services are like keys to the doors of your home. We all know the importance of guarding our keys with great care. If our keys fall in the hands of villains, our home will become vulnerable regardless how strong our doors and locks are. Likewise, if our passwords are lost, our internet or phone payment accounts will become open to abuse by fraudsters.
Recently, we have come across several fraud cases where the fraudsters have got hold of the passwords of the users through different means. We would therefore like to remind the public to do two things to help prevent fraud:
Keep your password confidential
Keep your computer and other e-payment devices (including smart phone) safe
In the past few years, banks have been upgrading the security of their internet banking services. For example, internet banking security was greatly enhanced after the Hong Kong Monetary Authority (HKMA) required banks in Hong Kong to implement two-factor authentication (2FA) for high-risk services (e.g. transferring fund to an unregistered third-party account) in 2005. One major type of 2FA method adopted by banks is to generate a one-time password (OTP) and send it to their customers’ mobile phones through SMS message. However, fraudsters never stop making new attempts to compromise the system. With the introduction of SMS forwarding service by the telecommunication industry, a fraudster may use this service to forward the SMS OTP from a user’s registered mobile phone to the fraudster’s mobile phone if the fraudster can get hold of the user’s password for activating the forwarding service.
To address this new problem, the banking industry has already worked with the mobile telephone companies to implement additional controls for SMS forwarding. It has been agreed that the telephone operators will deliver SMS OTP messages originating from banks (and EPS Company (Hong Kong) Limited, EPSCO), to the registered mobile phone of the customers regardless of whether the SMS forwarding service of that particular mobile phone number has been activated. This new arrangement will be implemented by the end of October 2011.
Before the new arrangement takes effect, banks (and EPSCO) will enhance their monitoring of suspicious transactions. If customers receive a notification that their SMS forwarding service has been activated when they have not made such a request, they should contact their telephone operators to verify SMS forwarding service and their banks (and EPSCO) immediately to ascertain that their bank accounts are not tempered with.
E-payment and e-banking services in Hong Kong are safe to use so long as both the service providers and the customers take appropriate precautions. In most cases, frauds can be prevented if the passwords are properly protected. The HKMA will continue to work with the banking industry and other relevant parties to maintain a high level of system security, and customers can also greatly enhance the security of e-payment and e-banking by safeguarding their passwords and computer devices.
Executive Director (Banking Supervision)
16 September 2011