Samahir Abdulah


The past thirty years have seen rapid advances in the technological component of banking services and as a consequence new legal issues have come to the fore, especially with regard to Electronic Fund Transfers (EFTs) which are now used to transfer money around the world, and have made fund transactions between payers and payees easier, faster and more secure. The method involves risks for both banks and customers, due to the possibility of unauthorized payments risks, credit and insolvency problems, and confidentiality issues. Most contracts and obligations now depend on the new technology, although there is a variety of methods for dealing with the concomitant risks. EFTs share a number of similarities with paper-based funds transfers in regard to methods of regulation, and the careful observer can identify patterns and themes. Today, the business world depends heavily on EFT systems for its procedures; and government and academia have also taken a keen interest in EFTs. This thesis reviews and examines the existing legal position of liability of banks and customers for risks associated with EFT transactions: unauthorized EFT instruction and the problem of customer identity, credit risk and privacy, especially, the systems employed for safeguarding the customer’s transactions and data. The thesis also makes recommendations for change. The rules for the allocation of risk are based on the various mechanisms used to access the account. Also, due to the complexities of EFT, consumer protection becomes a paramount goal and is a subject of much concern, particularly when it comes to determining liability for losses. The UK government implemented the Payment Services Directive 2007 by adopting the Payment Services Regulations 2009, to regulate the system. However, such Regulations do not constitute a comprehensive regime that applies to all legal issues arising in the context of the EFT system. This study argues the necessity for a re-examination of existing laws and proposes a model for the future approach to the issues associated with EFT payment. Different approaches to EFT will be assessed, and the comparative and contrasting elements will be analysed in order to propose a comprehensive solution to the deficiencies in the current framework. Central to the problem is the absence of any uniform standard: individual banks offer differing contractual terms and conditions and different means of accessing accounts. Consequently it is time to formulate new and comprehensive rules for the allocation of liability of risks associated with EFT transactions.

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