Arrests Made in UK Net Bank Heist

According to the United Kingdom’s National Crime Squad, three men were arrested at their homes north of London on Tuesday in connection with a high-tech heist at Egg, one of the Internet’s most high-profile banks.

Egg, which is backed by Prudential plc, confirmed that it had been the target of the Internet thieves. Published reports quoted the bank as saying that the thieves had only gotten away with “a handful of thousands of pounds” and that no money was taken from individual customer accounts.

The arrests of the three men, all in their 30s, came after a six-month investigation. The suspects were questioned, but released on bail Wednesday without being charged. The authorities also seized computer equipment, documents, cash and drugs during the raid.

Other Banks Targeted

Although Egg was the only bank that would confirm being targeted by the thieves, published reports indicate that after investigators for the National Crime Squad examined the suspects’ computers, they found evidence that other banks may have been targeted.

“We are not prepared to discuss the detail of the fraud,” the National Crime Squad was quoted as saying, “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.”

Investigators with the National Crime Squad are reportedly contacting the other banks.

Fraudulent Applications

The good news for Egg’s customers is that the thieves did not breach the security of the online bank. Although neither the police nor Egg would release details, sources close to the investigation were quoted as saying that the gang had made multiple bogus applications for loans and savings accounts at the online bank.

Egg did confirm that “fraudulent applications” were served on the bank.

The scheme apparently came to light after Egg noticed the multiple applications. The bank notified the police and then worked with the police to develop software to track the thieves.

Bad Timing

Tuesday’s arrests came at a bad time for Egg, which has spent enormously to attract and retain its 1.1 million customers. In July, the bank announced that it had racked up a loss of $122 million (US$) for the first half of the year, which followed a loss of $109 million in the first half of 1999.

Egg went public last month, and is in the process of launching an online insurance marketplace and expanding its e-commerce shopping portal. The bank did chalk up $50 million in revenues in the first half of the year, up from $9 million in the same period last year.

Mounting Concerns

The Egg incident has also served to fuel concerns in the UK about online banking. Late last month, Barclays Bank was forced to take its online banking service offline briefly after the discovery of a software glitch that allowed customers to read details of other peoples’ accounts. The bank confirmed the glitch, but said it had only received seven complaints from 1.2 million users.

Barclays blamed the problem on the installation of new software. After the breach was discovered, the company took its online banking service down for several hours while it reinstalled the old software.

The bank issued a statement saying that Barclays was “currently reviewing the new system” and “it will not be re-released until we are fully satisfied that this issue has been rectified.”

The company also apologized to its customers and said, “Security of our customers’ details is of paramount importance to us and we deeply regret that it has been compromised.”