What are consumers’ security responsibilities for passwords and PINs?

Consumers must protect themselves from fraud by keeping their bank account and key card PINs and passwords, secret. In the case of National Australia Bank Ltd v Swed (No.2) [2015] NSWSC 1322, the Court found that this requirement did not include Customer Identification Numbers issued by banks.

In this case, the Court rejected National Australia Bank’s (NAB) application to take possession of Mr Swed’s home. Mr Swed claimed that his wife, who lived with him, was responsible for fraudulently accessing his accounts through a telephone banking system. Mrs Swed withdrew funds from his account and used them to gamble. Mr Swed claimed that he did not know about his wife’s use of the accounts or money. Mrs Swed was able to access Mr Swed’s bank accounts because she knew his Customer Identification Number. It was printed on the back of Mr Swed’s keycard, and on letters and statements sent to Mr Swed by NAB.  She was also able to memorise Mr Swed’s telephone banking password as she had seen it displayed on the LED telephone screen after Mr Swed had entered it to check his account balance. Additionally, Mrs Swed had discovered Mr Swed’s account PIN by watching him when he used ATMs.

NAB claimed that, even if Mrs Swed had accessed Mr Swed’s accounts, Mr Swed had acted “with extreme carelessness” in allowing his wife to gain unauthorised access to his bank accounts; and he should therefore be legally responsible for the missed repayments on the loan.

Mr Swed said that whilst he was aware of Mrs Swed’s gambling addiction, he thought that it was largely under control. During the trial, he gave evidence that he had put Mrs Swed’s name on a register to exclude her from gaming venues and had also told NAB not to speak with her or allow her any access to his accounts. He also claimed that he took steps to exclude her from standing near him when he used an ATM. Their family home had also been transferred into Mr Swed’s sole name as a safety measure.

The Court found that Mr Swed did not act “with extreme carelessness” because there he was not required under the Electronic Funds Transfer Code to keep his Customer Identification Number secret. The Court was also convinced that Mr Swed had done enough to try and keep his wife from knowing his password and PIN. Judgment was given in favour of Mr Swed; and NAB was ordered to pay his legal costs. Mr Swed was not required to repay the funds withdrawn and gambled by his wife.

If you are in default on your home loan repayments you can contact us for advice.


Michael Duncan