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| Britain |
| Victims of internet bank fraud will have to pay up |
| 2004-11-14 |
| BANKS will no longer honour the debts of victims of internet fraud after a sudden rise in attacks against online accounts, The Times has learnt. Britain's 14 million internet bank customers have faced a month of intense bombardment from fraudsters trying to access online accounts in devious "phishing" scams. Around 60 such frauds, each generating hundreds of thousands of e-mails, were detected in October — a 33 per cent increase from September. MessageLabs, an internet security company, is currently intercepting 50,000 messages and 80 to 100 phishing websites a day. Banks are not insured against the losses and have to compensate victims themselves. They paid out more than £4.5 million in refunds to approximately 2,000 fraud victims in the first half of this year. Some police officers have recommended users to abandon internet accounts altogether. Up to now, British banks have automatically refunded money to victims, regardless of how obvious the fraud was and how much the customer was at fault. |
| Posted by:Mark Espinola |
| #7 Naa Mrs. D. it's just that whole thing I did in grad school that gave me a bit of a differnt perspective on a few things. To me a bank that implements a system that's so easily defrauded isn't much different than a bank that takes all of the cash out of the safe and puts it in wheelbarrows in their parking lot with only a rope cordon to protect it. Either way the bank isn't fulfilling their duty to protect depositor's accounts because they've not implemented sufficient safeguards. The method used to perpetuate the fraud (physical carrying away versus online shenanigans) shouldn't reduce the culpability of the party with the duty to protect the assets. ZF - I can't comment further but the case has been in the courts for months and no one seems to care. By the time it's all said and done the woman will owe her lawyers half her life's savings if she's able to recover. |
| Posted by: AzCat 2004-11-14 9:58:59 PM |
| #6 AzCat has become more or a Northern Californian than he thinks. He probably voted for Anna Achoo. |
| Posted by: Mrs. Davis 2004-11-14 8:00:21 PM |
| #5 The bank is a third party, I suppose, but not to know unless it's been alerted that a customer has voluntarily given his details to fraudsters. |
| Posted by: Bulldog 2004-11-14 7:53:52 PM |
| #4 Up to now, British banks have automatically refunded money to victims, regardless of how obvious the fraud was and how much the customer was at fault. Why it should be so? Why is it the banks' responsibility to compensate customers because of money lost due to their own gullibility? I don't want my bank to be subsidising the careless and the idiotic. An entity such as a bank has a fiduciary duty to protect its client's assets from fraud, even where said client must be protected from their own stupidity to a degree. No one's debating that banks don't owe their customers a duty to take every reasonable precaution to protect their money from theft and fraud. However, what we're talking about here are transactions that do not involve the bank in any way. The bank is not even a third party. If I walk up to you and say "I'm from your bank - please hand over your cards and PIN numbers" - how could the bank be considered responsible if you're foolish enough to actually do it, even if I'm wearing a good copy of the bank's uniform? Why on earth should your bank compensate you? |
| Posted by: Bulldog 2004-11-14 7:48:12 PM |
| #3 AzCat: Here in NoCal I know of a bank customer who checked her monthly statement and discovered that $300k, her entire life's savings, had been transferred out of her account in the previous month via fraudulent wire transfers. The bank, a major national player, refused to take the hit because the "... had followed all of our standard procedures to the letter." There was no evidence that she'd done anything wrong at all, well aside from selecting this particular bank that is. Make the identity of the bank public, and depositors will stage a run on it faster than you can say "rosebud". Legal liability issues will prevent banks from adopting the same policy in the US. |
| Posted by: Zhang Fei 2004-11-14 7:31:51 PM |
| #2 Bad precedent for consumers, dumb or otherwise. Here in NoCal I know of a bank customer who checked her monthly statement and discovered that $300k, her entire life's savings, had been transferred out of her account in the previous month via fraudulent wire transfers. The bank, a major national player, refused to take the hit because the "... had followed all of our standard procedures to the letter." There was no evidence that she'd done anything wrong at all, well aside from selecting this particular bank that is. An entity such as a bank has a fiduciary duty to protect its client's assets from fraud, even where said client must be protected from their own stupidity to a degree. If the bank offers a service that is so rife with fraud that the client's assets become unsafe the service should be discontinued, made safe, or surcharged to cover client's losses. Allowing the large entity that already holds all of the power in the relationship to merely say "too bad" when their clients are defrauded will be a disaster. |
| Posted by: AzCat 2004-11-14 4:10:02 PM |
| #1 Good move. And inevitable. I would hesitate to credit the banks for their prior generosity when, as the article states "[u]p to now, British banks have automatically refunded money to victims, regardless of how obvious the fraud was and how much the customer was at fault". People unable to realise when they're the victims of a web fraud shouldn't be using internet banking. Simple as that. It's in not the banks' responsibility if a third party sends one of their customers an email and the customer buys the con. Partial fault should the fraudsters have discovered customers' details through lax bank security, perhaps. But compensation for said frauds should never have come from the banks' resources, anyway - that in itself could be considered a kind of hush money, and borderline criminal, coming as it does from the resources of blameless investors, customers and shareholders. |
| Posted by: Bulldog 2004-11-14 7:35:37 AM |