One controversial legal issue in relation to fraud in e-banking is how the losses arising from flaws in electronic payment systems would be distributed between the consumer and financial institution. The paper examines the scope of liability of the consumer and bank for unauthorised Electronic Funds Transfer (EFT) under the U.S. and Nigeria laws. Allocation of liability where a consumer is in the picture is, regulated by legal rules in the U.S. The Central Bank of Nigeria regulates e-payment

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... bility issues through guidelines. The protection accorded the consumer by the U.S. EFT Act is wider and financial institutions share more liability than the consumer as opposed to the situation in Nigeria. Under the Nigerian law, consumers' liability is unlimited. Legal improvements are needed to protect the consumer as the weaker party within the context of electronic payment transfer. 61 uncertainties for both consumers and financial institutions regarding liabilities related to electronic payments, to provide protection against unauthorized or erroneous electronic transactions that access consumer accounts by setting guidelines to allocate liability for unauthorized transactions as well as imposing documentation and recordkeeping requirements to assist consumers in detecting and remedying disputed transactions. 1 A number of countries have enacted legislation on electronic commerce for the aim of protecting consumers. However, studies indicate that these pieces of legislation do not adequately protect consumers using electronic payment system as they do not address the important aspect of how to fairly allocate losses between a consumer and a financial institution. 2 A similar observation is made in respect of e-commerce legislation in the APEC region. 3 Nigeria operates electronic banking without any specific legislation in this area or on e-payment, unlike the USA (U.S.) which has specific legislation to regulate EFT which contains liability regime for unauthourised electronic payment transactions. The paper examines the extent the consumers are protected from third party fraud, faults on the part of financial institutions, and consumers' own carelessness. The paper gives an overview of consumer e-payment systems, followed by a review of threats to consumer e-payment systems. The remaining parts of the paper cover documentation of EFT, legal and regulatory frameworks for allocation of liability for financial loss arising from EFT under the U.S. and Nigerian laws.