Personal Finance: The Hi-Tech Investor - Covered against the cyberspace crooks

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The Independent Online
IF WE are to believe the more emotive commentators, the internet is populated almost entirely by crooks and pornographers. The pornographers are probably here to stay but the computing industry is having to give the crooks an increasingly hard time.

Research by NOP found that 75 per cent of internet users who have not disclosed their credit card details online withheld them because of security concerns. There are two main security risks on the net: interception of sensitive data, such as a credit card number, and fraudulent sites.

The former is becoming less problematic for customers using well-designed sites. A change to export regulations in the US means that military-strength encryption software - which scrambles data when it is sent over the net - is now available here. Security experts never claim that any system is totally foolproof, but the latest 128-bit encryption would take so long to crack, and so much computing power, that it is simply not worth the trouble.

That belief is now being backed by an internet insurance policy underwritten by Royal & SunAlliance. The policy protects a site's customers against abuse of their bank or credit card details as a result of someone breaking the encryption system. It also protects the retailer against an attack by hackers. An insurance policy will form part of a security guarantee offered to internet users.

Some shopping sites are already offering guarantees: before Christmas, the Excite shopping channel offered a pounds 50 security guarantee to shoppers who used their credit cards on its site. And the online booksellers (and the UK's offer guarantees if your details are used fraudulently. According to Alan Telford, from Royal & SunAlliance, the policy means that using the net poses no more risk than using a credit card over the phone or by mail order. The policy has its limitations. It does not cover security breaches once customers' data reaches the company. It would not cover someone hacking into a bank or store's network and stealing credit cards. Nor does it cover fraud by staff working at the company. But the risk of someone in an internet business abusing confidential data is no greater than in any other business where customers use credit cards.