Hackers Hold Banks "Strictly and Indirectly" Liable

Source: Korea Times
Complete item: http://www.koreatimes.co.kr/www/news/biz/2009/05/123_45312.html

Though it did not catch the attention of many people, something very interesting is happening in the world of Korean Internet transactions. In April 2006 when the Electronic Financial Transaction Act (EFTA) was promulgated, it was at the
center of controversy as banks were burdened with the precautions against the wrongdoings of hackers.

Since the contents of the EFTA are focused mostly on who will be held liable (Article 9) if there are any problems while engaged in electronic financial transactions, legislators of the EFTA worked with the presumption that there will be hacker attacks and concentrated mostly on how to protect consumers.

Although supporters of the EFTA argue that financial Internet service providers are in a better position than general participants of the electronic financial transaction, it remains questionable and leaves much room to be rectified at least in the eyes of U.S.-trained lawyers like me. In the traditional jurisprudence of law and equity, is it fair and just to hold the
financial Internet service providers (FISPs, mostly banks) strictly liable even without faults to be indirectly liable for any attacks from hackers?

Now since there is a move to amend the EFTA, though it is still not certain yet as to whether the banks will become less burdened after the amendment, I believe it is the right timing to revisit the EFTA almost three years after its debut.

The key issue about the EFTA is that the FISPs, mostly banks, in Korea under the act are ``strictly liable'' by ``vicarious rule'' in Internet  transactions. Of course there are some exceptions in the law for a few minor cases when the banks will be off the hook by proving the contributory negligence by its clients, for example when there is malice or gross negligence by the clients. The whole controversy can be boiled down to two questions:
1. Is t fair and right to hold the FISPs strictly liable for all the wrongdoings of
electronic financial transactions?
2. Will the strict vicarious liability for the FISPs by the EFTA detect and prevent all the wrongdoings of electronic financial transactions?

Continue Reading at Korea Times

FISPs, EFTA, liablility of banks,

Related articles by Zemanta

• Visa & Interlink Interchange Rates (Reimbursement Fees) (pindebit.blogspot.com)