Recent report
The FSA reported the state of identity theft damages misused by forgery and theft banking cards in fiscal 2006 on June 26th, 2007.[1][2] The report described the change of damage from fiscal 2000 to fiscal 2006. According to the report, the fraud number by forgery card was decreasing from 897 in fiscal 2004 to 531 in fiscal 2006 whereas the figure of deceit by theft card increased from 6,080 in fiscal 2004 to 6,603 in fiscal 2005.
Law
The Depositor Protection Law was enforced in February 2006. The aim of the law is to indemnify damages incurred by identity theft. However, the scope of the law is somewhat narrow. It is only applied to cash withdrawals used forgery and theft banking cards from ATM. The law does not cover all of the cases of identity theft fraud.Whilst we can withdraw deposit by bank book at a bank teller’s gage, the law is not applied to the way of withdrawals. The law also does not cover the internet fraud committed by the way someone impersonates his victim’s bank account, user name and password collected by phising and others. In other word, the application the law is extremely limited. In conclusion, our law has not high quality. The level of the law should be not keep up with other developed countries.The law might be revised within 2 years after enactment, because it stipulates the possibility by parliament resolution at the enactment. The controversial problems such as false withdrawals by internet might be discussed again at the time of coming law revision.
Requirement
Depositors have to inform to the incident both to the financial sector and a police station. The law covers the damages within 30days after they notified the incidents to the relevant institutions. Depositors have to inform to the incident both to the financial sector and a police station. The law covers the damages within 30days after they notified the incidents to the relevant institutions. Japanese banking institutions never send account statements periodically; therefore depositors are not aware of the incidents by them. They usually know their damage by updating their accounts.
Reduction of reparation
Principally, financial institutions have obligation of indemnification of all damages to victims if the victims have no negligence for their incurred damages. On the other hand, if the victim has significant negligence, they cannot get any indemnification at all. In case victims have slight negligence to the occurrence of false withdrawals, the treatment differs in the case of forgery card from theft card. Victims of the theft card can only get 75% of damages as indemnification whereas they can recover all damageｓ in the theft card. The burden of proof of depositor’s negligence is imposed on financial institutions.
Assessment
Once again, the scope of the law is significant narrow. First of all, the law should include the money withdrawals by theft bank book: it is unreasonable to distinguish the theft bank book with the theft banking card; rather, the victims of theft bank book should be more protected because the officer of the bank teller’s gate can make sure the identity of depositor by verifying some features: signature or other depositor’s personal data Secondly, the law should be extended to the money transfer by internet. Nowadays, most financial institutions introduce internet banking system. The number of internet banking fraud by identity theft was 55 in fiscal 2006 whereas the figure in fiscal 2005 was 49. Fraudulent money transfer in internet banking by identity theft seems relatively small compared with fraud by forgery and theft card. However the number of fraud is firmly growing. The necessity of consumer protection in fraudulent internet money transfer by identity theft is not different from off-line fraud. Financial institutions have effective menu to prevent or mitigate identity theft in internet banking. At least, they have capability to develop suitable solutions. On the other hand, consumers have no way or less skill to impede their damages.Most financial sectors are already introducing the solution authenticating the person. There might be risk in case the institutions does not introduce or develop the solutions. But it does not become persuasive and comprehensive reason to transfer the risk to consumers. The risk should be endured by the financial institutions, considering the significant difference between consumers and financial sectors concerning ability of preventing damages incurred by identity theft.
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