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Proposal Reviewing Customers Liable for Online Banking Fraud

Internet banking in the future appears hazy, as consumers have to collect the $25 million annual bill for being victimized by online scams.

Australians banks have adopted the policy to reimburse customers who face results of online scams that steal passwords and other personal data.

But the Australian Securities and Investment Commission (ASIC) were reviewing a proposal that will transfer the burden to consumers who will have to bear the consequences of any bad transactions made in their accounts.

On January 19, 2007 ASIC summoned submissions to assess the Electronic Funds Transfer Code of Conduct (EFT Code) with emphasis on liability issues relating to growth and sophistication of online fraud and monitoring other payment sources. According to ASIC's review of the EFT Code, in the absence of a 'minimum or adequate' security, banks will be answerable for their own losses.

Greg Tanzer, executive director of ASIC consumer protection said in a statement, an important issue to address by the review is whether account holders should bear any of the losses occurring from frauds like malicious code and phishing. He said the consultation paper discussed this in detail. Tanzer's statement appeared on January 22, 2007 in a publication by ComputerWorld.

Greg Tanzer said it was an opportune time to review the liabilities in the background of the voluminous and sophisticated frauds on the Internet. The review will make clear the consumers' responsibilities, he said.

While the Daily Telegraph assumes law firms representing banks, are tabling the proposal, the Australian Bankers Association dismissed that any of its members was lobbying ASIC to modify the EFT Code. Media reports made incorrect statements about Australian banks lobbying ASIC in connection to liability changes.

The thought that online account owners should be partly liable for losses resulting from security violations on their home PCs is put up in a discussion paper prior to the review of the EFT code of conduct.

Ted Egan, co-founder of security vendor TrustDefender acknowledged that his firm released a press release on the basis of a misreported article but believed that banks have been undermining risks in online banking for years.

Related article: Privacy And Data Protection Critical To Future Success

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