Money stolen from a card: banks may be required to compensate for the loss
This has been reported by the Ministry of Finance, citing draft law No. 15274 on safeguarding the rights of bank customers in relation to banking fraud.
A bill has been registered in the Verkhovna Rada proposing to oblige banks and other financial institutions to compensate customers for funds stolen by fraudsters.
This concerns cases of unauthorised or erroneous transactions involving bank cards and accounts. The authors of the initiative believe that financial institutions should bear greater responsibility for the security of transactions and the protection of users’ accounts.
The bill proposes establishing a clear procedure for dealing with cases of unauthorised access to bank accounts.
How compensation should work
Under the draft law, the bank will be obliged to immediately reimburse the customer for the full amount of losses in the event of an unauthorised or erroneous transaction.
To receive compensation, the customer must promptly notify the bank that they did not make the relevant payment.
The bank must then restore the account balance to the state it was in prior to the fraudulent withdrawal of funds.
What the bank must prove
The draft law proposes changing the approach to customer liability. It is the bank that must prove that the customer is at fault for the leakage of personal data or the transfer of confidential information to third parties.
The customer will not be liable for the loss of funds if the transaction was carried out without the physical use of the card or without the cardholder’s electronic identification.
The user can only be held liable if the bank proves in court that the customer, through their actions or inaction, facilitated the transfer of PIN codes, passwords or other data to third parties.
What are the bill’s chances?
The authors of the initiative propose strengthening safeguards for people who have fallen victim to online fraud whilst using bank cards and accounts.
At the same time, experts note that the chances of the bill being passed quickly remain low, as it was drafted by MPs rather than the government.
At present, it is merely a registered legislative initiative. For the new rules to come into force, the bill must be debated in the Verkhovna Rada and passed.
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