Allocation of liability in case of fraudulent use of an electronic payment instrument: The new Directive on payment services in the internal market

E-Commerce Liability and Security Breaches in Mobile Payment for e-Business Sustainability

“…Third, the liability issue also tends to be slightly different according to the application areas. In the case of electronic card systems, some countries, such as England and Germany, seemingly assume the existence of gross negligence, which implies that the card holder must prove the absence of gross negligence [32]. However, others, including Belgium, do not assume the existence of gross negligence on the part of the customer, and state that the bank should prove that the customer was grossly negligent.…”

“…In contrast to European countries, in the United States it seems to be irrelevant whether the card holder acted with extreme negligence or not when it comes to allocating liability. In the United States, the user's liability seems to depend on the time frame within which the holder notified his institution of the loss or theft of the instrument [32][33][34]. The Electronic Funds Transfer Act and Regulation E of the United States Truth in Lending Act contain a liability regime that favors the card holder.…”

“…For transactions that have taken place prior to notification, the liability of the holder is always limited to 50 USD. If the consumer fails to report within 60 days, they will be liable for all transactions that have occurred after this period [32].…”

The Debit and Credit Card Framework Contract and Its Influence on European Legislative Initiatives

“…32 Authors like STEENNOT (2008) had no doubts when interpreting these PSD provisions in the sense that the European legislator has distributed liability for unauthorized operations between the user and the provider of the payment services (see 2.2.). Nevertheless in any occasion the author makes a reference to the PSD text and to the payer there mentioned, as it is defined on art.…”