Chapter 81: The First Hour: Contacting the Bank and the Credit Card Issuer

If the first ten minutes after discovering a fraud are the initial cry of distress, the first hour is the hour of battle. The adrenaline that flooded your systems in those first few minutes and led to the initial password lockdown now begins to give way to cold, sobering realization: your money, your savings, or resources accumulated over years are currently in transit through digital conduits. In professional terms, we are in the "golden hour"—that window of opportunity where decisive and precise action may significantly impact the chances of recovering the funds.

In this chapter, we will address the primary front line: the financial institutions. The bank and the credit card issuer are the gatekeepers, but sometimes bureaucratic conduct can make it difficult to realize your rights. The first hour is the time when the victim must act as an informed customer, who is aware of their rights and demands the treatment they are entitled to by law.

The following scenario is an educational example based on common fraud patterns. The characters and events are for illustration purposes only.

Avner (a pseudonym), a small business owner, was sitting in his office in the afternoon. An SMS message, purportedly from a well-known shipping company, informed him that a package he ordered was stuck in customs and he needed to pay nominal "handling fees." Avner, who was waiting for a shipment at the time, was not suspicious. He clicked the link and entered his credit card details on a site that looked completely legitimate.

Shortly thereafter, alerts began appearing for purchases in various countries and on digital currency trading sites in increasing amounts. Avner realized he had fallen victim to fraud. After taking initial steps to change his passwords, he realized he had to make direct contact with the financial institution to try and stop the transactions on his account.

In his conversation with the customer service center, Avner encountered an initial response based on a dry protocol. The service representative stated that since the transactions were authorized using a security code sent to his phone, the bank might view this as an informed authorization by the customer. Avner felt helpless, not knowing that there are protected rights under the law and that at this critical hour, the way the facts are presented has future legal significance.

The Legal Basis: The Payment Services Law and the Liability Imposed on the Financial Institution

To understand the state of affairs, the legal landscape must be examined. In Israel, the relationship between a customer and a financial entity in the event of fraud is largely regulated by the Payment Services Law, 5779-2019.

The guiding principle in the law concerns the allocation of liability, based on the understanding that the financial institution is better equipped to prevent damage. In cases of "unauthorized use" of a payment instrument, the customer's liability is generally limited, provided they reported the incident to the financial institution without delay upon discovery.

However, financial institutions may argue that the customer acted with "gross negligence" or provided the details willingly. In such cases, a legal analysis of the circumstances of the case is required. A legal analysis of similar cases suggests that the financial institution is not meant to serve as a mere "technical conduit" and must employ oversight and monitoring mechanisms to detect irregular patterns. When a customer contacts the bank in the first hour, they are essentially exercising the duty of care imposed on the bank to protect customer funds.

Distinguishing between "Unauthorized Use" and "Authorized Fraud"

In initial conversations, representatives may attempt to classify the event as one authorized by the customer. In our professional opinion, in many cases, even if the customer was misled into providing an authentication code, the techniques employed by the perpetrators may negate the "free will" element; therefore, it is possible to examine the liability of the financial institution for failing to identify the irregular activity in real-time.

The Call to the Service Center: A Strategy of Determination and Documentation

In our educational scenario, Avner realized he had to act decisively and document the process. He requested an inquiry number and ensured that the exact time of the report was recorded in the system.

The time at which the notification was delivered to the bank carries great legal significance. One can examine holding the bank liable for actions performed after the time of the report, especially if the financial institution did not act to block the possibility of making further transfers.

What is recommended to emphasize in the first call?

In times of pressure, victims of fraud often tend to take responsibility for actions that are not necessarily their fault. It is important to remember that these conversations are recorded and may serve as evidence when examining the question of "gross negligence." It is recommended to focus on describing the professional facts:

• Reporting unauthorized transactions performed on the account.
• Demanding the halting of transfers that are in "pending" status.
• Requesting a block on digital access until a comprehensive investigation is completed.

In Avner's scenario, he insisted that the bank activate a procedure to reverse transfers with the receiving banks. Although certain transfers are considered fast, in the first hour there are sometimes technical actions that can be taken with the security and compliance departments of the financial institutions involved.

The Credit Card Issuer: The Second Front

The credit card issuer is a separate entity from the bank, and a dedicated contact must be made to its security department. The relevant legal concept here is "disputing a charge." In cases of transactions made without the physical card present, it is possible to explore the option of recovering funds from the credit card issuer, as under certain circumstances, such an obligation may arise according to legal provisions, unless proven otherwise.

The Issue of the Authentication Code

The use of enhanced authentication mechanisms (such as an SMS code) is sometimes used as a defense argument by credit card issuers. However, one can demonstrate how "social engineering" techniques affect the customer's ability to make an informed decision. If you are asked about providing a code, it is recommended to respond with caution and factual precision, while emphasizing that the transaction itself was not authorized by you.

Managing the Response from the Financial Institution

In situations where the customer encounters a lack of initial cooperation, the following options may be explored: 1. Requesting a conversation with a manager. 2. Contacting the cybersecurity or security department of the institution. 3. Stating the fact that the report is being documented for the purpose of examining the institution's liability for damages that may be caused due to delay.

In the educational scenario, Avner's insistence on his rights led to an examination of options for reversing transfers (Recall). Although these actions do not guarantee a result in every case, they are critical for proving the attempt to mitigate damage in real-time.

Recording and Documentation in Real-Time

Accurate documentation in the first hour is of great value for the future. It is recommended to record:

• Dates of the calls and names of the representatives.
• Inquiry numbers provided.
• A summary of the actions taken (blocking the card, disputing a charge, etc.).

This documentation may serve as a significant tool in future legal proceedings, should the financial institution attempt to raise arguments regarding the timing of the report or the content of the notification.

Analyzing the Intra-Bank Process

Financial institutions possess fraud monitoring systems. At times, the institution's interest may be to classify the event as the sole responsibility of the customer. However, under certain circumstances, it can be shown that these systems failed to identify a known fraud pattern.

It is important to know that international transfers also sometimes pass through intermediate stations. Prompt action by the financial institution, such as sending a cancellation request within the interbank systems, may lead to the halting of funds. The customer's determination in the first hour may incentivize the institution to perform these actions.

Summary of the First Hour

At the end of the first hour, in the scenario we described, Avner took action to block access and document his inquiries. The success of the process depends to a large extent on the customer's determination and a legal examination of the financial institution's duties. The financial institution may review the recovery of funds in accordance with the provisions of the law and case law.

Points to note when speaking with the financial institution

• Claims of sole responsibility: Statements by representatives regarding customer responsibility are not necessarily a legal dead end.
• Inquiry number: One must ensure receipt of documented confirmation for every inquiry.
• The institution's duty to act: The need to file a police report does not detract from the institution's immediate duty to try and halt the funds to the extent possible.

Checklist for immediate actions

• Blocking: Credit cards, direct debits, and digital access.
• Reporting: Unauthorized use and disputing specific charges with the credit card issuer.
• Demand for reversal: Of bank transfers not yet completed.
• Documentation: Recording, noting representative details, and taking screenshots of account activity.

Legal Aspect

In accordance with the Payment Services Law, there is protection for the customer regarding unauthorized use that occurred after notice was given. Regarding actions taken prior to the notice, Section 16 of the Law establishes limitations on the customer's liability, unless aggravating circumstances are proven, such as fraudulent intent or gross negligence. The definition of the term "gross negligence" is subject to legal interpretation, and courts examine each case on its merits. The mere act of clicking a link in a message, under certain circumstances, will not necessarily constitute grounds for denying the customer the protection of the law.

The first hour is only the beginning. In the next chapter, we will discuss the steps required regarding law enforcement authorities and other bodies, while continuing the struggle to restore financial rights.