Who Carries the Risk of Fraud in Online and Internet Banking?
For conventional banking a cheque is valid only if the person who is purported to have signed it did in fact do so it is invalid if this person did not sign it. This means that if there is a disputed signature the burden falls on the bank to prove that it is valid and not on the customer to prove that it is fraudulent. But for many Internet bank accounts a transaction is presumed valid if it is authenticated with the account holder’s security codes even if this account holder did not, in fact, use these codes. In consequence, if these codes are used fraudulently the account holder is likely to be liable for the transaction. This places the risk of fraud on the customer and not on the bank. Here are some current examples of terms and conditions that show this process in action. 1.
