From: "truth"
Date: Wed, 05 Aug 2009 13:22:32 GMT
Local: Wed, Aug 5 2009 9:22 pm
Subject: Credit card law is appalling
truth comment: the case of liability in unauthorised use of the
credit card again shows the law and regulation in singapore
are stacked against the small people and consumer. no where
in the world are consumers made to bear the full responsibility
of lost due to unauthorised use of stolen credit card except
It's appalling
THAT is the verdict of the Consumers Association of Singapore (Case)
after a recent random test by The New Paper revealed shocking lapses at
stores.
At four out of the five retail outlets, no one bothered to check the
signatures on the bills. No one asked why two Chinese women were charging
expenses to a credit card bearing an Indian name.
Case's executive director, Mr Seah Seng Choon, said: 'The interests of
consumers is compromised because of the lack of due diligence on the part of
the retailers.
'It clearly shows the absence of checks by retailers in the cases
surveyed.'
The ease with which these unauthorised transactions took place
highlighted a liability issue that has been brought up recently by the
plight of 39-year-old Madam Tan Shock Ling, whose wallet was stolen.
By the time the human resource administration manager discovered and
reported the loss of all seven of her credit cards, the thieves had chalked
up $17,100 in unauthorised transactions. This happened 'in less than an
hour', as shown from the credit card slips.
And the banks say they are liable only for unauthorised transactions
made after they are notified of the cards' loss.
This is the case with most banks here, verified the Association of
Banks in Singapore, which regulates the Code of Consumer Banking Practice.
According to ABS, there is a three-way agreement among the bank,
customer and the merchant concerned. It works like this: 'The bank agrees to
pay the merchant on behalf of the customer, and the customer agrees to pay
the bank back.'
But it appears to be the customer who has to bear most of the
responsibility. And mind you, there are more credit cards than people in
Singapore.
According to the Monetary Authority of Singapore (MAS), there were
more than five million credit cards among a population of about 4.5 million
in 2007.
The police said the total number of credit card fraud cases per year
has increased from 193 in 2004 to 264 last year.
Credit card fraud still low
However, an MAS spokesman said that the ' incidence of credit card
fraud in Singapore is among the lowest in the world and has been declining
since 2003'.
Whatever the case, the consumer is the one who loses, even when
merchants don't bother to check cards that are presented.
Madam Tan told The New Paper: 'I'm not saying the cardholder should be
absolved from any liability, but there is a lack of liability on the part of
the retailer, when they don't do their duty in even checking the signature.'
According to Case, the retailer should check the signature on the card
with that on the payment slip 'at the very least'.
Mr Seah suggested: 'It might also be better for the retailer to
request identification of the consumer who is using the card, especially if
the transaction amount is large.'
Another victim of credit card theft, Mr Ng Kin Foong, 25, said:
'Retailers here should certainly step up their efforts.'
The recent university graduate was robbed at gunpoint in New York
three years ago, and had his phone and wallet with an American credit card
stolen.
The difference is, he did not need to worry about payment of
unauthorised transactions, though he could not immediately report the card's
loss to the bank.
In the US, federal law limits cardholder liability to US$50 ($70). And
this is not just a practice in the US alone.
Malaysia's central bank, Bank of Negara, limits consumer liability to
RM200 ($80) after a card is stolen.
A spokesman from the Office of Fair Trading, the UK's consumer and
competition authority, told The New Paper that 'credit card issuers are
jointly liable with merchants'.
In Australia, the Electronic Funds Transfer Code of Conduct stipulates
that cardholders have no liability for unauthorised transactions. But not so
in Singapore.
ABS told The New Paper: 'This helps to avoid moral hazard...
'If the customers suffer no loss, it felt they would have no incentive
to be careful or to report lost cards promptly.'
Incentives for merchants?
Yes, but our experiment seems to show that the merchants have no
incentive now to be careful or to do their best to prevent fraud.
In response to queries from The New Paper regarding possible
improvements to the current credit system, MAS acknowledged that handwritten
signatures 'have serious limitations in preventing card fraud'.
MAS said it is 'reviewing the implications for Singapore' of
developments in newer and safer card technology such as the chip-and-PIN
systems used in Britain and most of Western Europe.
But in the meantime, we should set a limit on the loss the consumer
has to bear when his card is stolen and used fraudulently.
'Retailers should alert banks before approving credit card
transactions over $1,000,' suggested Madam Tan.
Mr Ng said: 'It would be good to have at least some form of compulsory
secondary identification checks by retailers for all transactions made with
credit cards.'
He has been asked to produce secondary identification in the US but
not here.
Singapore ranks quite high in credit card ownership globally. (see
chart)
So, surely it's time we did something about this 'appalling'
situation.
Research by Hoe Pei Shan, newsroom intern
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Other countries cap loss on stolen cards:
Why can't we?
a.. IN AUSTRALIA:
The Electronic Funds Transfer Code of Conduct stipulates that
cardholders have no liability for all unauthorised transactions.
There is also a Consumer Credit Code that governs all credit
transactions taking place in Australia, which introduces standardisation.
a.. IN MALAYSIA:
Malaysia's central bank, Bank of Negara, limits consumer liability to
RM200 ($82) after a card is stolen.
a.. IN THE UNITED KINGDOM:
A spokesman from the Office of Fair Trading, the UK's consumer and
competition authority, told The New Paper that 'credit card issuers are
jointly liable with merchants.'
There is also a Consumer Credit Act, which states that cardholders are
not liable for unauthorised transactions beyond £30 ($72).
a.. IN THE US:
In the US, federal law limits cardholder liability to USD$50 ($72).
a.. IN SINGAPORE:
The Association of Banks in Singapore, which regulates the Code of
Consumer Banking Practice, says that with most banks, card-members are
liable for transactions effected before the bank is notified of the
loss/theft of the card.
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