business law paper

Digital Banking: Legal Issues

[11/04/2018]

Running head: DIGITAL BANKING: LEGAL ISSUES 1

Digital Banking: Legal Issues

Introduction Comment by Belinda Potter: Colons are not required in APA

Digital banking, with the internet being the medium, has revolutionized the world of banking. with respect to many aspects. Debashis Basu mentions that the working of the digital system is well only when the default options set in the system are designed to help the buyer of the product. Digital banking service provides the basic information related to account specifically the balances and the statements. With respect to the digital banking service, customers in the present time are using this service for the transfer of funds between accounts in an interbank transfer or even in the intra-bank transfer systems. With the development of internet banking, digital banking is not available on the smartphones of every individual. However, like every other technology, this technology holds both pros and cons for users. Digital banking after its utilization came up with some legal issues. These legal issues were identified when people had to face the consequences of digital banking. Some of the common legal issues associated with digital banking along with the real-life examples and their remedies will be discussed. Comment by Belinda Potter: I would not include these words. Comment by Belinda Potter: Where did you get this name from—if it is an author of one of the articles you read then you would use the last name and the year Comment by Belinda Potter: What product? Comment by Belinda Potter: Who has this basic information? Comment by Belinda Potter: It is not good grammar to begin a sentence with a preposition.

Digital bBank tTransactions and Example of Swift Financial Network:

Banks are legally liable for the digital bank transactions that are carried out within the banking system. The digital banking system can go wrong due to a number of reasons. Hacking and cyber theft isare some of one the common issues encountered. The hacking of credit and debit card has been known by everyoneEveryone has known the hacking of credit and debit cards since ages. With the increase in the use of digital banking, a more authorized system is required that keeps a check and balance on the entire working of every customer account since in case of loss of networking data by any of the bank it is the customers that suffers the most. Digital banking service comes up with minimal charges deducted from the account of the customers. Hence these are some of the things which makes the banks liable for all such hacking conditions. Here the basic question arises if the customers will be getting their lost money due to any kind of hacking done on the networking system of the bank. Comment by Belinda Potter: You need to clarify what you mean by ages-- Comment by Belinda Potter: This sentence seems to be about a different topic. In good writing every sentence in a paragraph should be about the same topic. So if you are switching your topic to fees, then it is time for a new paragraph. Comment by Belinda Potter: This sentence is unclear.

In one of the article, ‘The "Foundation" of Risk: Does a Banking Client Get Its Money Back after Cyber Theft? By Klees (Klees, 2016) the writer has mentioned the incidence encountered in the Swift banking system. March 12, 2016, reported a cyber-theft of more than $1 billion. However, it was the luck of the company that the government organization did not lose so much of the amount as one of the workers noticed some changes in the network and stopped the network at that time. Comment by Belinda Potter: In academic writing you would never talk about an article in this way. You would just start out with the author, so it should look something like According to Klees (2016), there was an incident involving the Swift banking system…. Comment by Belinda Potter: What does this date have to do with your topic? If it is the date something happened, then it would be better to say On March….. Comment by Belinda Potter: Who reported the crime? Comment by Belinda Potter: I think this is a bit unclear and could be stronger by just discussing how an observant employee saved the company’s money.

With this, the story of the hack observed in the Swift banking system came forward in front of everyone. Thieves entered the Swift banking system and hacked the networking system resulting in the loss of both the bank and their corporate clients. No evidence of fraud was present in this concerned case. Despite all this situation this cannot be denied that hacking attacks is one of the biggest realities in the world of digitalization. For the process of recovery of the corporate clients who have been trusting the banks since forever, a law exists which has been summarized by the article given by the Kleen (date). This area of law as mentioned by Kleen is relatively new and has evolved with the progressed of technology. Comment by Belinda Potter: With what? The article? Comment by Belinda Potter: Came forward is the same as in front of, so you only need one or the other Comment by Belinda Potter: To might be better—in reading this I am seeing that the bank and its customers lost something. Comment by Belinda Potter: This word is not properly used here and could just be deleted. Comment by Belinda Potter: This is unclear. Read it out loud to yourself and you will probably hear a better way to write this. Comment by Belinda Potter: Slang type wording in not appropriate in academic writing. Comment by Belinda Potter: You should probably mention what the law is here since you introduced it and now your reader is wondering what the law is.

Under the aArticle 4A of the uUniform cCommercial cCode (Aadopted first at the time ofin 1989) mentions about the balance between the rights and obligations that exists between the banks and their corporate clients (law refers to them as customers) faced as a result of the ‘payment orders' whether oral, electronic transfer, or written. According to Article 4A initially, all the liability of the loss was on the bank unless the security of the bank was commercially acceptable and the bank accepted payment orders with complete security procedure. Comment by Belinda Potter: Where did you find this law? It needs to be cited. Comment by Belinda Potter: Unclear. Comment by Belinda Potter: Since the code is not generally known information you will need a citation for it.

Recommendation:

In this case, a mutual security system can be divided by the consent between the bank and the client so that both parties hold equally responsibilityle for the loss encountered. Comment by Belinda Potter: Which case? Comment by Belinda Potter: How is this loss encountered?

Digital banking payments and the fraud in them:

A customer buys from an online shop and proceeds with the payment process by using the facility of E-wallet. An email has been received connected with the E-wallet that the transaction has been successfully made but the online retailer mentions that no payment has been received. This sounds to be the moment of astonishing for the person. The money just got vanished somewhere in the cyberspace and the consumer is left with no option virtually. Comment by Belinda Potter: Unclear

Introducing fraud schemes is getting becoming common in the present time. One of the cases that have been encountered related to fraud scheme is mentioned by Spencer (2017).in the article of ‘Eye Doctor Tied to Bob Menendez Case Convicted in $100 Million Fraud Scheme by Spencer, T. (2017).

In the eye doctor case, the writer Spencer (2017) mentions about that the eye doctor from Florida who hashad been imprisoned because of being indulged in a $100 million Medicare fraud. What has been traumatizing here is the use of such a noble profession to earn in an illegal way. Patients gave a mixed opinion about the doctor as the doctor was found to make some patients recover while some patients were left blind forever. The number of fraud done by the doctor, in this case, was nearly 67 including all the healthcare issues caused to the patients and the wrong record keeping of payment and patients in their concerned files. Comment by Belinda Potter: Did you mean involved? Comment by Belinda Potter: Earn what?

In this case, after going through the process of the trial the doctor has been convicted as a result of the proven fraud done with the number of clients. Similarly in case of the digital banking frauds section 43 of the Information technology act (This covers the data protection) related to all such frauds and the remedies associated with it. Once the flaw is found in the banking transaction cyberspace, the bank holds reliable in case of the data being unprotected due to the banking system. Supreme courts mention the contractual agreement between the customers and the bank once they agree to the utilization of the online banking system. Comment by Belinda Potter: Unclear. Comment by Belinda Potter: Where did you get this information? You will need to cite it. Comment by Belinda Potter: Is the bank reliable or are the liable? Comment by Belinda Potter: The Supreme Court or a state supreme court? How does this sentence fit into this paragraph?

Recommendation : Comment by Belinda Potter: Do you need the word recommendation in your paper?

However, in this scenario, the digital banking systems associated with certain banks need to come up with higher security remedies for keeping the trust of their clients.

Challenge of Global technology implementation and the use of Artificial intelligence : Comment by Belinda Potter: Try to be consistent with your titles and capitalization.

Some of the banks in the present time are lacking the level of infrastructure that is required for the process of digital banking. Keeping the level of digital banking adequate is one of the basic issues that lead the security risks among the customers. The customers in return stop trusting the banks. In case some issue is found the banks suffer legally along with the monetary loss. In one of the article, ‘Fraud Case Unsolved 3 Yrs. Later. Credit Union Times’ by Strozniak, P. (2017) the issue of frauds and the legal correspondence to this issue has been mentioned. The article highlights that ‘Data Breaches’ are bad for the companies and the overall working of the banks since other than losing their customers they undergo through the process of monetary loss as well. Comment by Belinda Potter: You may be able to use a more academic word to mean the same thing. Comment by Belinda Potter: Unclear. Comment by Belinda Potter: Rewrite this so you do not use the title of the article, but rather use the author’s last name. Comment by Belinda Potter: Unclear.

After the issue of data, breaching was found by the retailers and the credit unions, both the parties agreed to the fact that data breaching is turning into a nightmare and the that Congress needs to come up with some legislation for this. The government, along with the assistance of FBI, started to figure out the reason behind the data breaching. While assessing the case of Parsons Pittsburg case mentioned in the article, the government at first came up with the fact that there are insufficient resources in the case whichcase, which has led to the possibility of this case. However, insufficient resources by the banking institutes or the financial holders have been researchers by the technological researchers and one recommendation has been found. Comment by Belinda Potter: What are some of the inefficiencies? Comment by Belinda Potter: What possibilities? Comment by Belinda Potter: However is pretty much always followed by a comma. Comment by Belinda Potter: Unclear.

Recommendation:

In one of the article, ‘Video, AI Helps Credit Unions Step Up Digital Banking’ mentioned the issue of lack of communication among the branches of the credit union. On this, the researcher of this case has come up with the idea of using AI for keeping the level of Digital banking high. With the idea of using AI in the digital banking system of banks, digital banking can be made innovative and an idea of enhancing the offers made by the application can prove monetarily useful for the bank. Comment by Belinda Potter: Ditto on articles. Comment by Belinda Potter: This whole section can be made more clear.

Conclusion:

Digital banking is the technology of the present time. Digital banking system empowered the entire process of transaction, however, like all technologies this technology has its dark side whichside, which has undergone through some legal procedures as well. Three main legal issues in Ddigital banking include the data breaching idea, transaction issues, and global technology implementation. Laws have been encountered against all these issues, however, digital banking system needs to fight the idea of data breaching and fraud schemes initially to maintain the reputation of a bank overall. Comment by Belinda Potter: Is this the best word for what you mean here?

References

Armstrong Ffiles for Bbankruptcy. (2017). Coal Age, 122(8), 4–5. Retrieved from http://search.ebscohost.com.proxyhv.lib.montana.edu/login.aspx?direct=true&db=bth&AN=126445112&site=ehost-live

Deahl, R. (2018). Reverberations Ccontinue in Donadio Eembezzlement Sscandal. Publishers Weekly, 265(33), 4–5. Retrieved from http://search.ebscohost.com.proxyhv.lib.montana.edu/login.aspx?direct=true&db=bth&AN=131194574&site=ehost-live

Former Michigan CEO Aadmits Eembezzlement. (2018). Credit Union Times, 29(7), 14. Retrieved from http://search.ebscohost.com.proxyhv.lib.montana.edu/login.aspx?direct=true&db=bth&AN=128269538&site=ehost-live

Klees, E. H. (2016). The “Ffandation” of Rrisk: Does a Bbanking Cclient Gget Iits Mmoney Bback after Ccyber Ttheft? Business Law Today, 1–6. Retrieved from http://search.ebscohost.com.proxyhv.lib.montana.edu/login.aspx?direct=true&db=bth&AN=117411628&site=ehost-live

Spencer, T. (2017). Eye Ddoctor Ttied to Bob Menendez Ccase Convicted in $100 Mmillion Ffraud Sscheme. Time.Com, 1. Retrieved from http://search.ebscohost.com.proxyhv.lib.montana.edu/login.aspx?direct=true&db=bth&AN=126591628&site=ehost-live

Strozniak, P. (2017). Fraud Ccase Uunsolved 3 Yyrs. Llater. Credit Union Times, 28(3), 1–19. Retrieved from http://search.ebscohost.com.proxyhv.lib.montana.edu/login.aspx?direct=true&db=bth&AN=121374246&site=ehost-live