Lessons for Payment Providers
In a landmark decision, the Arbiter for Financial Services awarded €26,600 in compensation to an elderly woman who was aggressively manipulated by fraudsters. This case highlights significant legal points regarding the responsibilities of payment providers and the protection of vulnerable individuals from cybercrime.
The Scam
OpenPayd, a Maltese-licensed payment provider, was found liable for crediting the victim's funds to third parties without her knowledge or approval. It transpired that the victim was coached and manipulated by scammers to invest in cryptocurrency and led to believe that the OpenPayd accounts she opened were safe, as they were set up in her own name.
The arbiter emphasised the importance of stringent internal systems to ensure clarity and security in transactions involving virtual IBANs, including due diligence procedures when onboarding companies such as its merchants. The arbiter rejected the provider’s arguments that there was no commercial agreement between the victim and the provider, simple because the victim may have entered into a commercial agreement with one of its merchants instead.
The decision noted that OpenPayd failed to implement adequate measures to prevent unauthorized transactions. Additionally, the arbiter noted that the payment provider should have intervened in the payment process or ensured clarity to the user when she had indicated herself as a beneficiary.
Implications for Payment Providers
This landmark case highlights the responsibility of payment providers in terms of their obligations under anti-money laundering laws and the revised Payment Services Directive. The decision demonstrates that liability cannot be evaded by payment providers, particularly those enabling services such as virtual IBANs, by arguing that a provider’s merchants were involved in the fraudulent conduct.
This decision goes further by highlighting the broader issue of protecting vulnerable individuals from sophisticated cybercrime tactics. The fraudsters used remote access software and multiple communications to gain her trust and control her financial actions. The result of such scam left the victim unable to afford to stay in her home. The arbiter's decision clearly underscores the importance of safeguarding vulnerable individuals from such manipulative schemes.
Our Expertise in Cybercrime Assistance
Our cybersecurity lawyers have extensive experience in assisting clients who have fallen victim to cybercrime. Our team of legal experts provides comprehensive support and guidance through the complexities of cybercrime cases. We work diligently to ensure our clients receive the justice and compensation they deserve, leveraging our deep understanding of Maltese laws and regulations. Our firm has handled multiple instances of cybersecurity breaches, including assisting clients with complex cross-border cybersecurity incidents on a local and international level and recovering funds transferred during hacking cases.
