The judgment handed down in the Supreme Court of New South Wales earlier this month in the case involving National Australia Bank and a customer whose wife gambled with money from his account is a reminder to banks that the bar is set high when it comes to proving a customer was careless about protecting their PIN or password.In the judgment (reported in Banking Day in full last Friday), Justice David Davies said the test of carelessness "was considerably higher than acting unreasonably."NAB sold Joul Swed a mortgage in 2004. Swed defaulted in 2011 and in 2012 NAB demanded that the whole of the outstanding loan be repaid. When that demand was not met the bank took Swed to court seeking possession of his property.In his defence, Swed claimed that his wife, a gambling addict, had stolen from his accounts and gambled away a large sum of money. He argued that he was not liable for the loss because of his wife's fraudulent use of his accounts.Davies said the principal issue in the case was whether Swed and his wife were to be believed: that is, was it true she obtained access to the mortgage account and other accounts and misappropriated the funds without his knowledge.A second issue was whether Swed was in breach of the NAB's banking terms and conditions. The bank argued that he contravened the terms and conditions by failing to protect his transaction card PIN, telephone banking password and his National Identification Number from his wife.Where a bank can prove that the customer contributed to a loss through fraud or contravention of the requirements of the terms and conditions, or though carelessness, the account holder is liable for the loss.Swed denied that he had ever given his telephone banking password or his PIN to his wife, any of his children or anyone else. He also claimed that he had given instructions to the bank that his wife was not authorised to provide instructions in relation to his accounts.Mrs Swed gave evidence that she had used the telephone banking system to transfer money from the home loan account and that she had gained the telephone banking password without Mr Swed's knowledge. She also made unauthorised use of his transaction card at ATMs.Davies said the evidence was not entirely consistent. The bank argued that much of it was not true and that Swed either disclosed his PIN and password or acted with extreme carelessness in failing to protect their security.Davies said: "I do not think Mrs Swed always told the truth in her evidence. I am entirely satisfied, however, that Mrs Swed embarked on a course of conduct which was designed to satisfy her gambling addiction, and that conduct involved the systematic deception of her husband in relation to the bank loan."I accept that Mr Swed did not disclose his password or his PIN to Mrs Swed at any time."As to whether Swed was careless, Davies reviewed Swed's practice of keying in his password and passing the phone