If a financial institution fails to sufficiently verify the identity of a customer during the process of using financial services non-face-to-face, the court has ruled that victims of smishing crimes do not have to repay the loan.
According to the legal community on the 8th, Judge Han Nara of the Civil Division 83 at the Seoul Central District Court ruled in favor of plaintiff A in a lawsuit seeking confirmation of non-existence of debt worth about 60 million won against K Bank, Mirae Asset Life Insurance, and NongHyup Bank.
On March 30 of last year, A received a mobile wedding invitation text message and clicked on the web address (URL). As a result, a malicious application (app) was installed on A’s smartphone, and personal information such as a copy of the driver’s license and financial information was leaked. The smishing organization immediately committed crimes on April 1 by newly opening a smartphone under A’s name, causing a total damage of about 60 million won through loans via the app and cancellation of the housing subscription savings.
A filed a civil lawsuit requesting the invalidation of the loans and cancellations, claiming that each financial institution did not make sufficient efforts to verify identity or prevent damage. In response, the financial institutions argued, “Since this is not a financial transaction subject to the obligation of real-name verification under the Financial Real Name Act, there is no obligation to implement identity verification measures.”
The court ruled in favor of A. The court stated, “As non-face-to-face electronic financial transactions become common, electronic financial fraud crimes such as voice phishing and smishing that exploit this are becoming increasingly sophisticated,” and “there is a need to protect victims of electronic financial fraud crimes by imposing strict identity verification obligations on electronic financial transaction operators.”
It added, “In cases like this, where electronic financial transactions are conducted through electronic documents and non-face-to-face, financial companies need to take active measures to fulfill their duty of care and prevent accidents in order to be exempt from liability.”
Furthermore, the court pointed out, “Issues regarding loopholes in identity verification procedures using stolen copies of identification cards in non-face-to-face financial transactions have been continuously raised,” and “As defendants whose main business is non-face-to-face financial transactions, they should have strengthened identity verification methods by adopting measures such as requiring customers to take photos of their real-name identification cards (ID cards) with their faces directly exposed or additionally requesting video calls, which is not technically very difficult.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
