Who pays for cybercrime?

LIABLE: MUST THE BANK COUGH UP OR IS IT THE CUSTOMER'S RESPONSIBILITY?

- 

Banks consider consumer education as one of the best ways to protect their customers against cybercrime, but when you are laying at the side of the road with injuries and no phone, it is not always that easy to do what that education from the bank told you to.

While consumer education is important, is it not unfair to expect users to defend themselves when the defences in place do not empower them? It seems that the same warnings banks give to protect customers are often repurposed by fraudsters to gain consumers' trust, while impersonating the bank.

Prof Michelle Kelly-Louw, head of the department of commercial law at the University of Cape Town, says that is true, but how do you then balance the rights and duties of the parties?

"The duty to educate consumers and improve financial literacy was placed on the Financial Sector Conduct Authority (FSCA) and the National Credit Regulator (NCR) in terms of legislation.

"However, they cannot carry this burden on their own and financial institutions are under no specific legal obligation to do so, although indirectly they are expected to. Financial institutions should also have a statutory duty to play a role. They hold consumers' funds and therefore too should have such a duty.

"If financial institutions do alert consumers or at least try to do so, what more can they reasonably or practically do? However, there is still the possible systemic risk banks may be exposed to, given the large amounts these scams."

Is it not time to shift the burden back to the system and not the customer but using better technology and systems? Louw says when payment instruments, such as credit and debit cards are used, the underlying transfer of funds typically occurs through an Electronic Funds Transfer (EFT).