ONLINE BANKING WILL BECOME THE RESPONSIBILITY OF CUSTOMERS.

The future of internet banking is under a cloud as consumers face picking up the $25 million annual bill for advertingly becoming victim to online – scams. Banks currently reimburse customers who are electronically robbed by the growing number of viruses that steal data including passwords and personal details. But a proposal being reviewed by the Australian Securities and Investments Commission (ASIC) will shift  the burden to consumers, making them liable for any and all bad transactions they make under ASIC’s review into the Electronic Funds Transfer Code of Conduct, unless they have an unspecified “minimum or adequate” security, they will be liable for their own losses. At the very least, consumers who use internet banking will be forced to spend $60 a year in order to keep antivirus software up to date.

ASIC’s executive director of consumer protection Greg Tanzer said the review in liabilities was timely given the rise in the number and sophistication of internet fraud. “(It) will clarify what the responsibilities of consumers are”, he said. The Australian Bankers Association (ABA) denied any of its member were responsible for lobbying ASIC to change the EFT Code. Its believed the proposal is being put forward by law firms representing banks.

Institutions have been unwilling to invest in online security because of  “the law losses to date – and the associated difficulties of making a business case for higher levels of investment in counter – measure technology, “the review states.

Senior finance policy officer Nick Coates from consumer watchdog Choice had serious concerns about the proposals. Banks could provide effective security at a much cheaper rate than individual consumers, he said. “If you go into a branch to make a withdrawal the bank provides security. Why can’t they do that online?”

The rise of internet banking had been extremely beneficial for banks, he said. “Now they are trying to pass the increase in security costs on to consumers.”

He said investigating unauthorized electronic transactions would become unworkable under the proposal. It could end in a very silly situation where the bank has to inspect your laptop to check your virus protection. I suspect dispute resolution could get very nasty.