Wednesday 8th Feb 2012 02:08 PM
Credit card stolen? Mind the pitfalls
Welcome to Qotion.com!
Qotion.com is a website for you to browse and discuss financial products. Currently, we are undergoing further development, and hope to serve you when we relaunch the site with new features.
Tue, 08/04/2009 - 12:30
Original Article was posted in the Straits Times:
BANKS in Singapore are standing by their policy of holding customers responsible for transactions made on their lost or stolen cards if they do not report the missing card in time.
Consumers who cry foul may have no leg to stand on, as the policy is stated in the fine print on the contract they have signed.
A check with seven banks and two credit card companies has found that those who hold Singapore-issued cards are liable for any unauthorised transaction made before the loss is reported.
Some, like DBS Bank and Citibank, will at most review cases individually.
One bank that did not want to be named told The Straits Times it was unfair for banks to take the blame and shoulder the cost when cardholders themselves in most cases are careless or negligent. There may also be fraud involved.
Only Maybank and American Express (Amex) have limited liabilities for lost and stolen cards, capped at $500 for Maybank and $100 for Amex.
An ST report two weeks earlier about a consumer who was left with a $17,100 bill after she lost her cards led others like businessman Benjamin Ng, 46, to ask if the practice in Singapore was fair.
Mr Ng, who lived in the United States for 10 years, told ST: 'In the US, the consumers have the right to write off such obvious injustices by simply informing the banks when their cards are stolen and their liabilities would be wiped off.'
The US Truth in Lending Act has special provisions which limit cardholders' liability to $50 for fraudulent charges.
Malaysia's central bank, Bank Negara, limits consumer liability to RM200 (S$82) after a card is stolen.
In Singapore, banks are guided by the Code of Consumer Banking Practice, which is silent on credit card liability.
The exact extent of credit card fraud is not known, though Euromonitor International estimated that $5 million was lost in financial card fraud last year; this covers credit cards, Nets, debit charges and charge cards.
It found there were 7,180,900 credit cards in circulation last year, with $20,642,900 worth of transactions.
Amex and Maybank say they receive a few reports each month of lost or stolen cards while OCBC says it rarely comes across fraud.
Singapore Retailers Association executive director Lau Chuen Wei advises consumers to vote with their feet and walk away if they disagree with the terms and conditions of the issuing bank.
Agreeing, the Consumers Association of Singapore president Yeo Guat Kwang said: 'Consumers can choose to take cards from banks that offer them terms they are satisfied with.'
Terms & conditions
American Express
# If you have 'acted in good faith and with reasonable care' to safeguard your card and promptly report its loss in writing, your liability for unauthorised charges before you report the loss is limited to $100.
# Platinum and Centurion cards enjoy $0 liability.
# Security features: Before large-value transactions go through, Amex calls the card holder to validate details; card holder may be asked for billing address during purchase to verify against file records.
MasterCard
# $0 liability for unauthorised use of such cards issued in the Asia-Pacific, but this is subject to the issuing bank's terms and conditions. The final decision is with the issuing bank.
# Security features: Tamper-evident signature panel, three-dimensional holograms and card validation codes.
Citibank
# The customer is liable for all unauthorised transactions unless the bank is satisfied the loss is not due to negligence.
# Security features: Customers can choose to receive free SMS and e-mail alerts when transactions are made.
DBS Bank
# $0 liability for any unauthorised charges made after card is reported lost.
# Free Card Protection Plan was introduced last year for all POSB and DBS customers for up to $1,000 in fraudulent charges.
# Security features: Cardholders will be called when suspicious transactions are made.
HSBC
# The customer is liable for all card transactions, authorised or not, before loss is reported.
# Card Protection Plus insurance scheme offers fraud protection of up to $5,000 before the loss of card is reported and up to $500,000 after report.
# Security features: All cards issued in Singapore come with a microchip and a fraud- monitoring system to verify card charges against cardholder's spending behaviour.
Maybank
# $0 liability for any unauthorised charges made after report of loss.
# $500 liability for unauthorised transactions before notification of loss, provided holder 'acted in good faith and exercised due diligence in ensuring the safe-keeping of the card'.
# Security features: SMS messages to holders to alert them to suspicious transactions when they cannot be reached.
OCBC Bank
# The customer is liable for all transactions, authorised or not, before report of loss.
# Security features: OCBC trains merchants on checks and balances required for transactions. For example, merchants are trained to ask for ID when in doubt or to call the bank for verification; SMS alerts are sent to holders to verify large or unusual purchases.
UOB
# $0 liability for any unauthorised charges after report of loss is made.
Original excerpt was published in Straits Times:
I REFER to various letters in response to the reports, 'Thieves use her credit cards to charge $17,000' (July 13), and 'Credit card stolen? Mind the pitfalls (last Tuesday).
A credit card is a credit facility extended by a bank to a customer. When a customer uses a credit card, the bank agrees to pay the merchant on behalf of the customer, and the customer agrees to pay the bank back. The credit card provides convenience for the customer as he does not need to carry large amounts of cash. At the same time, this means that credit cards should be handled carefully. Hence, both customers and banks have responsibilities.
Although merchants are required to review the signature on the card, in practice, it is easy to forge signatures. Banks therefore demonstrate their responsibility in many other ways.
For example, banks have fraud detection systems to monitor card usage on a real-time basis. Analysts review suspicious transactions and contact customers to verify and validate high-risk or value transactions. That was how letter writer Tan Shock Ling ('Here's what happened', last Friday) discovered her credit card was missing. Sometimes, however, the customer cannot be contacted, particularly if he is overseas. In some cases, the bank then 'blocks' the credit card as a safety measure and asks the customer to validate the transaction.
The first and primary line of defence is still the customer who has custody of the card. It is the customer's responsibility to keep the credit card safe. If the customer leaves the card in a handbag in an unattended car where it might be stolen, then, regrettably, that is negligence. With most banks, card members are liable for transactions effected before the bank is notified of the loss of the card. But where every reasonable precaution has been taken by the card member, including immediately reporting the loss of a card, the card member is not liable for any unauthorised purchases.
The Association of Banks in Singapore will continue to monitor this issue and keep abreast of developments. We encourage prudent behaviour by both customers and banks to prevent credit card fraud.
Ong-Ang Ai Boon (Mrs)
Director
Association of Banks in Singapore
Word from the horse's mouth, as it were:
AS THE individual mentioned in the report, 'Thieves use her credit cards to charge $17k' (July 13), I wish to share what transpired between the banks and me to illustrate how banks handle victims of credit card theft.