Online bank Egg has confirmed that three people have been arrested after its anti-fraud software detected their attempts to set up bogus online bank accounts.

Egg said the software enabled it to provide information to the National Crime Squad, leading to yesterday's arrests. An Egg spokeswoman said the arrests were in connection with "attempted fraud", which Egg said had led to a "minimal" amount of money being lost by the bank.

Egg denied reports that the bank had at anytime been at risk from a security breach. "We are extremely vigilant and our security remains un-breached. Our customers' money remains secure," the spokeswoman said.

She added: "Four or five months ago, the police came to us for help in tracking down people setting up fraudulent online bank accounts. We worked with the police to develop a piece of software and two months ago this was installed. It was this that led directly to the arrests made yesterday."

Gary Clifton Marshall, operations director at Egg, said the bank uses several pieces of software to detect possible fraud. "Some of it was developed in-house, but we also use some software called Hunter. We have invested heavily in security systems and getting the right people," he said.

"When a fraudster attempts to set up an account [they] may use information from the electoral roll, but they may not have all the details they need and will make them up. Our system can cross-check this data to make sure it is genuine. We can also detect whether multiple accounts are being set up from one IP address," he added.

"When a fraudulent account has been set up it will usually be used quite quickly and we have software that can detect any abnormal activity - so it is only a minimal loss at the start," he said.

Since setting up its online banking service last year, Egg has suffered a string of embarrassments.

Among other internet banks, Egg was criticised for placing the responsibility on the customer to prove that they have been the victim of fraud, rather than the common practice of automatically refunding the money once it exceeds a set amount, usually £50.

It also experienced a series of website crashes earlier this year, which left customers' personal information on the screen.

In addition, it sent out emails to one customer displaying credit card details in the subject line and text.

See also:

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Egg has left its customers scrambling for answers after closing access to online bank accounts without warning or explanation.  25 Jan 2001

Egg in good shape despite financial loss

Internet bank Egg has strengthened its position as the largest of the UK online banks, but its expansion has resulted in a widening financial loss.  16 Oct 2000

Boots combines loyalty and credit cards

Boots has unveiled a combined loyalty card and credit card in partnership with Egg, the internet banking arm of Prudential.  25 Sep 2000

Bull investigates web security breach

Security experts at Bull are investigating reports that a flaw with its web servers allowed access to confidential customer data.  01 Sep 2000

Barclays' web bank suffers security breach

Barclays has reopened its online banking service after an embarrassing security breach forced it offline yesterday afternoon.  01 Aug 2000

Egg comes first for UK online bankers

One in three home internet users in the UK has visited a financial services website - with internet bank Egg the most popular destination.  18 Jul 2000

Net banks criticised over fraud protection

Several prominent UK internet banks have been criticised for leaving customers to clear their name, or pick up the bill, if they fall victim to online credit card and bank fraud.  05 Jul 2000

Web crash scrambles Egg and Cahoot

Technicians behind Egg and Cahoot, two of the UK's biggest internet banks, have started their investigations into what caused their websites to crash.  21 Jun 2000

Egg scrambles for flotation

UK insurance giant Prudential has decided to press ahead with the flotation of Egg, in the face of a depressed technology market that has already seen three hi-tech companies drop similar plans at the last minute.  25 May 2000

Egg left red-faced after email debacle.

Online bank Egg sends emails to customer with her credit card number in subject line.  26 Nov 1999

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