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Sweden’s Supreme Court has ruled that a consumer that fell victim to a phishing scam is in line for compensation after unwittingly giving away their details to a fraudster.
A consumer who was fraudulently tricked into handing over his BankID and response codes from his bank box “acted with gross negligence but was not particularly reprehensible”, Sweden’s Supreme Court ruled.
According to the Supreme Court, the consumer was subjected to fraud and had shown “significant negligence by disclosing the codes”.
The case was instigated following an incident in August 2018 after a bank customer was tricked by a thief claiming to be from his bank’s security department.
During the two calls that day, the fraudster managed to get the consumer to hand over access to his BankID, an electronic identification system.
Estimated to have 6.8m users (in a country of around 10m), BankID can be used as a bank login, to make Swish payments and even for access to medical records.
The Supreme Court ruled that it could not be considered proven that in the course of the two conversations he intentionally disclosed the codes to an unauthorised person.
It was also unproven that the consumer acted with the realisation that there was a risk of the unauthorised transactions that were carried out.
“It was therefore not a question of such action required for a consumer to be considered to have acted particularly reprehensibly,” the Supreme Court ruled.
The Supreme Court’s ruling is based on the country’s Payment Services Act, which dictates that if the account holder has behaved with gross negligence in connection with the unauthorised transaction, the consumer may be liable for the loss, but only up to SEK12,000 ($1,172).
As a result, all losses above this threshold must be covered by the bank.
“It can be stated that very many consumers in recent years have been judged to have acted particularly reprehensibly when they have been deceived by skilled fraudsters and thieves. This has led to them having to take the entire loss themselves,” commented Kicki Westerståhl, head of the Consumers' Banking and Finance Bureau, welcoming the ruling.
“But thanks to the Supreme Court's clarifying ruling, consumers will hopefully get the consumer protection intended by the legislator.”
In particular, this ruling could have potential consequences for future claimants that are defrauded in the Nordic country.
The EU may look at similar kinds of rules as it sets about revising the Payment Services Directive (PSD2). Recently, a European Commission representative suggested that Brussels is considering expanding on fraud requirements in the directive.
Much like its European neighbours, such as the UK and Ireland, Sweden has recently taken action to crack down on fraud.
In June, the Swedish government announced a new inquiry into how to better prevent fraud and subsequent money laundering.
According to the government, it will consider measures including a new requirement for digital identity services such as BankID and clearing services such as Bankgirot to provide information on money laundering and suspicious transactions to policing authorities and allowing banks to be able to see more information about the recipients of transactions.
“The Swedish payments market has a long tradition of cooperation, where banks have created valuable financial infrastructure that they control,” Jens Olsson, a fintech advisor in Sweden, told VIXIO. “The entities providing critical infrastructure such as Bankgirot and BankID are well positioned to provide an efficient and holistic view of transactions.”
There should be patterns that can be discovered when seeing the network of interbank transactions that each and every bank can’t detect themselves, said Olsson. “In addition, it can also save a lot of work in time-critical investigations for investigators that don’t need to go to each and every bank to map the network of transactions as the network unfolds, transaction for transaction.”
In the announcement, the Swedish government noted that fraud against individuals is generating approximately SEK3bn ($293m) in criminal profits per year, which it says is as much as the profits from the drug trade in the first instance.
Meanwhile, crime profits from fraud are estimated to have increased by 49 percent in one year.
“Fraud money is fuelling the criminal world, the outcome of the inquiries can have large effects on society as a whole and not just the financial sector,” said Olsson, commenting on the government’s work.
