A Phishing Filter is a feature that helps to protect a computer system from phishing websites. Phishing Filter is also known as SmartScreen in Internet Explorer 8. It is an important feature that not only guards against phishing sites but also other malicious threats (Malware) as well. The feature was introduced in order to fight against websites that disguise as trusted sites so that you are fooled into divulging your personal information to cyber criminals. The danger is that Malware programs or Phishing Websites can attack and steal your vital information without your consent.
Basically, Phishing Filter works in background and depending on your user rights, collects addresses of websites you are visiting which are then checked against the lists of known phishing sites in the database. If the address exists in the list, the page will be blocked and message will be displayed to warn the user of any impending malicious activity. Mostly, the address bar will turn red if a Phishing site is detected. The user can decide to ignore the warning though this is not recommended.
In order to maintain security of your computer, it is recommended to constantly update your system to seal any security loopholes. Always remember to keep your system updated.