Belgium (Brussels Morning Newspaper) – In a significant development for victims of online bank fraud, Bart De Wever’s “supernote” proposes that banks should be compelled to compensate customers more frequently for losses incurred due to fraud.
This proposal was made at a time when there was political pressure on the financial institutions of the country to be more socially responsible and ensure that their clients were well protected. Today, if a bank decides not to fulfil its requirement to pay the victim, the customer can turn to Ombudsfin, an independent financial services ombudsman. In 2023, the number of cases that Ombudsfin recommended the banks to compensate overlaps victims in over 1,000 complaints cases; nonetheless, they followed this only one-third of the time because the recommendation was not legally binding. It is a new proposal that wants to shift this equilibrium because it has made the advice of the Ombudsman compulsory, and this means that the banks have to reimburse the victims more frequently.
Bart De Wever‘s supernote proposes making Ombudsfin’s advice binding, compelling banks to compensate victims of online fraud more frequently. This comes at a time when there is political pressure for increased efforts to prevent fraud, though the same banks doubt the practicality of such measures. The proposed changes outlined in De Wever’s supernote emphasize the banks’ responsibility to implement robust fraud prevention measures. The document obliges any PSP to develop sufficient safeguards against fraudulent transactions to encompass a range of activities. Additionally, it calls for a reevaluation of the term “gross negligence” in light of the increasing sophistication of fraud tactics. Testaankoop has supported this proposal by noting that the binding advice from Ombudsfin is crucial for offering consumers protection and making banks responsible for averting fraud. They also seek to increase security for large transfers/transactions, particularly where the contact is new or the accounts in question are overseas. The latter, however, is not too well welcomed because the banking sector is already countering these proposals. Febelfin, the sector’s representative organization, argues that binding Ombudsfin’s advice could lead to unfair expectations on banks, given the rapidly evolving nature of fraud techniques. They argue that while an ombudsman may be useful, accountability should principally be placed in the hands of the courts and that banks are currently committing large funds to fight fraud. These proposals raise concerns mainly about the conflict that exists between consumer protection and the running of financial organizations.
The growing challenge of online fraud
Online bank fraud is one of the latest and most discussed problems that has reached important rates in recent years. Ombudsfin reported that the average loss per incident of phishing drops at €2,500 while other types of fraud drop at an average of €25,275. Its target is always the heads of families or others that are considered to be in vulnerable positions to physically enable assailants; the elderly, for example, who might not be very acquainted with the technology as a young person, will lose all their savings to a scam. Cyber security expert Christophe Van Bortel was able to estimate that only in the district of Antwerp were people defrauded for about € 25 000 000 between October 2023 and October 2024.
Even though there has been regulation making the banks responsible for losses from phishing incidences since 2018, most victims still end up on the wrong side with their respective banks when reporting for compensation. This means that the banks cannot sustain themselves and seek reimbursement from the customers if they do not provide evidence that the act was performed through gross negligence of the victim. This has resulted in many debates on what constitutes negligence in those cases whereby victims are victims of more complex cons.
The problem of online fraud remains developing, and accordingly, everyone needs reliable protection mechanisms. In the list of proposals presented within the context of De Wever’s supernote, we can find the idea that may change the way banks approach fraud cases and the measures they are ready to take to compensate the victims. Given the continuous talks concerning the strengthening of the security measures and improvements in employment remuneration and compensation systems, Belgian stakeholders from both parties are interested in how and what the outcomes of these negotiations will be for the future banking system transformation.
