New Banking Code shifts liability for online fraud

by Gill Montia

Story link: New Banking Code shifts liability for online fraud

Recent changes to the Banking Code may have left Britons more vulnerable to the activities of fraudsters.

The code advises online account holders to keep their antivirus and spyware software and their personal firewalls up to date, as failure to do so makes life easier for hackers.

From March of this year, a new version of the code has included a clause stating that banks are not responsible for losses caused by someone else when customers have acted without reasonable care.

According to a report in the Guardian newspaper, the reasonable care clause could be applied to customers who have not taken steps to protect their PCs from hackers.

Internet security experts are interpreting the change as an opportunity for banks to shift liability for online banking fraud to their customers.

This has serious implications for anyone who manages their account online and particularly for those without a PC (such as immigrant workers) who use Internet cafes to access their bank accounts.

Last year, banks lost £22.6 million in online banking scams and while the figure was substantially down on 2006, the methods used by criminals to access online accounts are becoming ever more sophisticated.