Banks consider consumer education as one of the best ways to protect their customers against cybercrime, but when you are lying at the side of the road with injuries and no phone, it is not always that easy to do what 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. 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) respectively 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. In my view, financial institutions should also have a statutory duty to play a role.
They hold consumers’ funds and therefore it is just natural that they 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 run into if they were to bear the brunt.” “In this way, the card serves as the instrument, while the EFT is the method making the payment, showing that cards and EFTs are closely linked in practice.
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There is also no specific legislation governing EFTs. “Generally, a consumer cannot just merely ask the bank to reverse a wrong EFT payment made as the beneficiary must give permission for the reversal. However, the Supreme Court of Appeal did indicate in a case that if the transfer was due to fraud, permission may not be required.
Usually, the fraudster is long gone, as is the money.” She points out that banks already have the duty in terms of various pieces of legislation, such as the Protection of Personal Information Act and the Electronic Communication Act to ensure that they keep consumers’ data safe and provide adequate technology. However, the Electronic Communications and Transactions Act, Electronic Communications Act and the Protection of Personal Information Act provide a broad and general framework for the facilitation and regulation of electronic communications and transactions, but do not deal specifically or comprehensively with EFTs and electronic banking services.
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