The Financial Liability Game

Ars Technica has reported that a German court has found a victim of a phishing attack liable for successfully being phished. The finding is, at least in part, based on the bank’s position that they had previously warned customers about phishing attacks.

The court’s placement of liability is significant for a variety of reasons. Of course it’s important that the individual was victimized. The liability placement also defers expenses (likely through insurance) that the bank would have to assume were they at least partially liable for the customers’ actions. This said, we can understand (and perhaps disagree…) that, from a liberal position, individual citizens are responsible for their actions.

What is most significant are the consequences of placing liability on the individual. Specifically, it reduces the incentive that banks have to exercise their influence to address phishing. I’m not suggesting that the banks could hope to eliminate phishing by waving a gold-plated wand, but they are financially in a position to influence change and act on a global scale. Individuals – save for the ultra-rich – lack this degree of influence and power. While banks will be motivated to protect customers – and, more importantly, their customers’ money – if banks were found even partially liable for successful phishing attacks they would be significantly more motivated to remedy these attacks.