Supreme Court Clarifies Risk Of Loss Due To Fraudulent EFTs

La version française de cette communication est publiée ici.

The SCC released a short decision on December 10 confirming unanimously that it is the bank's customer who bears the risk of loss of an amount that the bank transferred by electronic payment order from the customer's account to a third party as a result of a phishing scam¹. The decision adopts the reasoning of the Québec Court of Appeal and specifies that it would not have been different if the customer's account had been in positive balance. In this case, the customer's account was in a debit position.

The decision

Sollio Groupe Coopératif, formerly known as La Coop Fédérée, (La Co-op) was a client of the National Bank of Canada (Bank). La Co-op was the victim of a "phishing" scam, fraudulently inducing it to instruct the Bank to execute payment to a fraudster. Having carried out the instructions, the Bank debited almost US$5 million dollars from the line of credit of La Co-op. The funds were