FSS to have banks compensate for phishing crimes

South Korea’s financial watchdog is seeking ways to have banks compensate voice phishing victims.

The Financial Supervisory Service said on Monday that it is reviewing related laws to reduce exemption grounds made for banks in terms of making compensation.

Over 12,800 voice phishing cases were reported between January 2011 and September 2012, for damages worth over 151.6 billion won ($139.4 million). Banks, however, do not have to provide compensation as the current law simply blames the victim’s negligence.

The FSS’ move came amid rising public calls for banks to be responsible for their lax online security systems that are easily exposed to phishing crimes.

“Voice phishing crimes started when customer information leaked out. So financial institutions are fundamentally responsible for the crimes,” said Baik Seong-jin, head of the Korea Finance Consumer Association.

Banks have not made significant efforts to help reduce such crimes so far, while local card companies last year paid out about 40 to 50 percent of the damages to phone fraud victims and strengthened identification procedures as well.

“We are examining the card companies’ system to see if it can also be adopted by banks,” said an FSS official.

Local banks, however, are gearing up to resist the measures.

“Banks’ corporate social responsibility is important of course, but it should be distinguished what we can do and what we cannot do,” said an official at a local bank who wished to remain anonymous.

By Park Min-young  (claire@heraldcorp.com)