There are two million cases of online fraud each year - but just one in five are reported to the police.
Victims are sometimes too embarrassed to make a complaint, a House of Commons inquiry has warned.
MPs including Birmingham MP Shabana Mahmood (Lab Ladywood) said banks must do more to protect customers.
That includes improving the way they work together and share information, in order to fight fraudsters.
Ms Mahmood is a member of the Commons Public Accounts Committee, which conducted an inquiry into a problem which costs £10 billion a year in the UK.
In a new report, the Committee said: “The crime is indiscriminate, is growing rapidly and shows no signs of slowing down.
“Urgent action from government is needed, yet the Home Office’s response has been too slow and the banks are unwilling to share information about the extent of fraud with customers.”
And they warned: "The main reasons fraud is not reported to the police are because people are too embarrassed, report their loss to the bank and do not take it further, have difficulties in making a report, or simply do not report it because they think nothing will happen."
Common types of online fraud include “card not present” crimes, where criminals make a purchase using the details on a bank or credit card, including the “cvv” number on the bank, without needing the card itself. There are believed to be 1.4 million incidents of this each year.
Other problems include “authorised push payments”, where customers are conned into asking their bank to move money. Charity Age UK told MPs that elderly people had been targetted.
But it has been estimated that up to seven out of ten of people who are victims of this type of scam do not get any money back.
Lloyds Bank told MPs that it would look at whether an individual had taken “reasonable steps”, such as to verify who they had been talking to and not being reckless with their information.
MPs praised the Home Office for setting up a Joint Fraud Taskforce in 2016, bringing together different agencies involved in fighting fraud, but warned there was “much still to do”.
And they said: “The response from local police to fraud is inconsistent across England and Wales. The police must prioritise online fraud alongside efforts to tackle other sorts of crime.
“But it is vital that local forces get all the support they need to do this, including on identifying, developing and sharing good practice.”
Committee chair Meg Hillier said: “Online fraud is a virulent and unprecedented threat that has taken hold rapidly, causes untold misery and costs individuals and businesses billions of pounds each year.
“The Government accepts there is an enormous amount of work needed to tackle the problem – work that in our view must put people first. Banks in particular need to step up, take responsibility and focus sharply on protecting and informing their customers.
“Technology is clearly critical to combating cyber-crime, and developing effective common defences should be a priority. Policing must also be more consistent. Government has a vital role in ensuring this happens.
“Meanwhile, the public cannot be left in the dark. Online fraud affects people of all ages and backgrounds. Young people are increasingly likely to fall victim to a crime which is perceived primarily as affecting the elderly and vulnerable.
“The Government must get better at explaining the tricks employed by fraudsters to target different groups, and set out clearly the action it is taking to tackle them.”