Electronic Funds Transfer, Authentication Procedures and Consumer Protection: Systematising a Consumer Orientated Approach for Kuwait

Financial institutions now conduct the majority of their financial operations by means of electronic systems. In this regard, the electronic funds transfer (EFT) process has facilitated the growth of financial markets worldwide by allowing both banks and their customers to fulfil their payment obligations in a fast and secure manner. The emergence of EFT has also reduced the use of paper money and other paper-based financial instruments. More importantly, the introduction of EFT has played a major role in enabling funds to be transferred between bank accounts without the need for the physical movement of the associated money. However, despite the widespread adoption of EFT, concerns have been raised that electronic payment systems do not currently provide sufficient protection to consumers. Moreover, it seems likely that the lack of formal rules governing consumer protection in relation to EFT has a negative impact on the perceived trustworthiness of the financial industry. Additionally, the lack of adequate consumer protection may result in consumers falling victim to different types of unauthorised transactions, such as the misuse of payment devices, theft of information or fraudulent acts. Thus, it is essential to focus on strengthening consumers’ position with regard to unfair practices and addressing the imbalance that exists in terms of the distribution of power regarding financial services and products. Given the above, this thesis investigates the role and impact of EFT and authentication procedures in relation to consumer protection in the United Kingdom and Kuwait as well as under Sharia law. In so doing, it examines the two countries’ current consumer protection legislation and provides a comprehensive analysis of the EFT frameworks and authentication procedures. In addition, based on the findings of this analysis, the thesis proposes a new model of consumer-orientated legislation designed to ensure the protection of individual consumers within the financial industry.