Israeli Court Orders Discount Bank to Compensate Customer Over Fraud Negligence

The Eilat Magistrate's Court recently ruled that Discount Bank was negligent in handling a fraud case involving a 70-year-old customer who reported suspicious activity in his account. Between December 7 and 9, 2021, eight unauthorized transfers totaling approximately 127,000 shekels were made from the customer's account to three recipients in Eastern Europe. Additionally, a loan of about 45,000 shekels was taken out in the customer's name on the last day of the fraud.

Despite the customer physically visiting the bank branch on December 9 to report the suspicious transactions and request account restrictions, three of the transfers and the loan were processed after his complaint. The customer also filed a police report. The court found that the bank failed to act appropriately despite clear warning signs, especially given the customer's limited Hebrew proficiency and advanced age.

Discount Bank argued that all transactions were authorized using the customer's credentials and that transfers abroad from former Soviet Union countries were common and not suspicious. The branch manager testified that the customer's report was considered a "request" rather than a formal complaint and did not escalate the issue to the bank's cybersecurity department. The court rejected these defenses, emphasizing the bank's responsibility to act immediately upon the customer's alert.

The judge ordered Discount Bank to reimburse the customer the full amount withdrawn, approximately 127,000 shekels, plus interest and linkage, and to pay an additional 20,000 shekels in legal expenses, totaling about 147,000 shekels. Attorney Yifat Ben Avi Brown, representing the customer, highlighted the ruling's reminder that banks have an active duty to protect vulnerable populations such as the elderly and new immigrants. Discount Bank did not provide a comment on the ruling.