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German Court Rules That Clients Responsible For Phishing Losses
benfrog writes "A German court has ruled that clients, not banks, are responsible for losses in phishing scams. The German Federal Court of Justice (the country's highest civil court) ruled in the case of a German retiree who lost €5,000 ($6,608) in a bank transfer fraudulently sent to Greece. According to The Local, a German news site, the man entered 10 transaction codes into a site designed to look like his bank's web site and his bank is not liable as it specifically warned against such phishing attacks."
Theses sort of cases are really hurting the customer, banks have no reason to invest in a serious authentication scheme for online banking. It's a joke, my bank uses a password and some random question about me. At the very least they need to offer a true two factor solution, preferably token or certificate based.
Why? How should a bank discover the fraud, if everything is authenticated correctly?
Is a bank also responsible for your losses if a guy comes to your front door, poses as a bank clerk and you cut him a cheque?
What? Read the article. The person who committed the act of stupidity is the person paying for it. This is the way it has to be.
If the banks payed for the stupidity of this man there'd be no incentive not to be stupid.
Why ?
The judge is right, there's no real viable way the bank can protect against this, even more modern protection schemes involving SMS messages still involve the enduser, and if he happily provides the received code to www.illtakeyourmoneythanks.ru despite numerous warnings from the bank (I have a similar bank, they clearly try to educate their users but as always most users are rather lazy than informed.) well, then there's really no way you can still blame the bank.
I know a large amount of users here are from the US and used to credit payments (as opposed to debit, which is the case here). Credit cards generally involve some (at first glance) better customer protection by laying all the risk at the seller, but debit cards almost never do this (and there's no need really).
I wouldnt go so far as to call the victim in this case an idiot, i don't know the guy, and it sounds like something that 1 in every 5 people who operate a computer would fall for at some point or another. But not following safety instructions from your bank, when they're clearly displayed EVERYWHERE, and get send to you in both real letters and as regular email updates, well i'd say the bank tried. My bank even gives free financial and online security seminars for people who aren't sure they understand what all the fuss is about.
Phishing, as we all know (at least those of us who frequent sites like /.) is a scam - and we also know that we should be responsible for our own action, however stupid it might turn out to be
But there are people who will never want to be responsible for any of their own action, and they will tell you that it's all the fault of that "1%" --- including those "banksters", and those "judge"
Muchas Gracias, Señor Edward Snowden !
... for which the bank still is liable. In this case, the customer grossly exceeded that level IMO.
However, what I am wondering is why the Greek bank (that could not identify where the money had gone to) is not liable. That is the real problem I see here. AFAIK, a bank has to be able to cancel a transfer up to 6 weeks after the transfer at the sending bank's request. So either the customer not only gave away 10 TANs despite being warned, he also failed to notice the transfer for quite some time, or something else is amiss here that the news story does not tell.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
The problem with this ruling is that the customer hardly had a chance. The bank offers an authentication protocol that is vulnerable to a widespread and difficult to defend against type of attack. The bank knew that the protocol isn't secure and even warned about the vulnerability. All this despite the availability of protocols which are much more secure.
Suppose a credit card company told you to keep your credit card number secret and declined responsibility for fraudulent transactions because you once handed your credit card to a waiter. Would that be OK? If the bank offers a vulnerable protocol, it should bear the damage.
since noone here seems to bother to actually find out what was going on:
german banks do use a two factor authentication scheme:
- to log in you need your account number and a five digit pin
- to authorize a transaction after logging in, you need one out of 100 one-time-use 4 digit pins; The bank issues you 100 of those at a time, and then chooses one of them randomly when you enter a transaction ("Please enter pin number 17").
In this particular case the victim had:
- fallen for a phising website / trojan / keylogger, even after all the warnings in the german IT press (how else would the crooks get his account number and superpin)
- entered at least ten different PINs on one page, which the banksspecifically tell customers to NEVER do. all the bank pages have a big fat "We NEVER ask you for more than one pin" warning labels.
In other news: man drank nitroglycerine then went to jump around on a trampoline, widow sues maker of nitroglycerine.
Lets just hope that it doesn't become European law. Actually I hope the judge loses a million
I'm not sure that I agree with that. Most phishing scams are rather obvious, and people really ought to look before they jump.
What feel is missing is that banks and other take it more serious and clean up their practises. Like, I have on a few occasions had my bank call me about something related to security (eg. an unusual transaction) - and bizarrely, the guy calling is reluctant or even refuses to give information about why he calls or which department he calls from - which makes it feel like yet another scam, even if it is genuine.
Ideally, they should give you a call, then let you call back on a security number posted prominently on their web-site (so that it is well-known). This ought to be basic routine.
It has irked me for quite a while how lacking internet banking is in terms of security. That is not to say that the measures they have implemented are ineffective, but rather that they miss out on entire classes of security. It's as though they stick a bunch of locks on the front door, but leave the bathroom window wide open.
The most obvious one: bi-directional authentication. Banks require you to prove you are who you say you are. This is done by a variety of methods from passwords to hardware card reading gizmos which spew out a limited time code. What they neglect to do is prove that they are who they say they are.
If the first step in authenticating your identity was one which authenticated the bank's then it would be a lot harder for phishers to pretend to be your bank.
#1: this happend in 2008. Since October 2009, there is new legislation in place that, that shifts liability to the bank (except in cases of gross negligence on the side of the customer) It's the bank that save money by offering online banking instead of traditional counters, so they are responsible for making that process secure.
#2: There is not a single bank anymore that uses plain one-time transaction codes anymore.
#3: A few months ago another german court ruled that it's enough for a customer to have up to date virus software for due diligence. That's all a bank can expect from customers with typical, average computer knowledge.
#4. On the other hand (and that's what's the actual rationale behind this story here), a bank can expect customers to understand and remember a security advice along the lines of "We will never ask you for more than one transaction code in a row and we will never ask you for a transaction code at all unless you want to make a transaction in the first place"
So there is not much relevance to this story.
bickerdyke
That security protocol isn't in use anymore.
The bank specifically issued a warning against exactly the type of attack the customer fell for.
That ruling is in line with the laws in place 2008, when that happend, Laws have been changed since then.
bickerdyke
To be fair, the banks do not allow you to opt in to security features or opt-out of security liabilities.
I'd love if my bank would allow me to secure my checking account to restrict outgoing payments to a list of accounts/payees confirrmed by the branch.
I'd love to opt-in to a second factor token authentication and 2nd bank card pin that has a lower withdrawl limit or one time pin that I can use in sketchy ATMs POS systems.
I pay the bank dearly to protect my money and deliver service. They have had years to spend on R&D. Luckily, I have not been affected by the lack of security or insurance from my bank.
120 characters ought to be enough for anyone
"the banks are responsible for the stupidity of individuals"
No, the banks are responsible for their lack of transaction security.