With 69% of Generation Z using mobile banking apps (compared to just 17% of Baby Boomers), it is clear that a significant shift towards online banking is fast occurr. This is in large part due to the fact that 82% of young smartphone owners shop using their mobile. With services such as PayPal, Apple Pay, and Amazon Payments, it is now easier than ever to send money over the internet. However, as with all new technology, this convenient method of shopping presents a major risk for fraud. This is because of online payments lack the same legal protection that you get from using a credit or debit card.
Online Payments Similar to Using Cash
The biggest problem with using a service like Apple Pay is that the payment is difficult to trace. The person receiving the money can be impossible to identify, so it is as if you have handed over physical cash. Lawmakers should therefore put measures in place to be able to track the payment to a real person, so that there is nowhere for fraudsters to hide.
No Verification Required
One way of improving online payment methods is by adding verification. At the moment, anyone can set up an account online and request money without having to prove their identity. Most banks require multiple steps of verification, but online payments have been slow to introduce this. The Canadian Payments Act protects funds when paying with a credit card, but needs to be updated to offer liability against online scams.
Sending Payments is Too Easy
Online payment services act as a convenient way of sending money. However, this can be open to abuse. For instance, using iOS, it is possible to send money via Facebook Messenger. This has led to instances of people setting up a fake Facebook page, offering a product such as concert tickets, requesting the money through Messenger, and then deleting their profile once they receive the funds. It is the fact that it is so easy to transfer money that many people do it without taking the time to consider whether the person they are speaking to is genuine.
Traditional card payments are incredibly safe in Canada, due to federal legislation protecting consumers from fraud. However, newer online payments don’t have this kind of legal protection. As the technology advances quickly, the legal frameworks need to be put in place before any more instances of fraud occur.
Written for Verhaeghe Law Office by Cassandra Tilbury
*Please note the content of this blog offers a general overview and does not constitute legal advice as every case is unique from one another. We encourage you to seek independent legal advice for any matter that concerns you.