Battling Credit Card Fraud
That the incidence of credit card fraud in Singapore - at 0.02 per cent - is one of the lowest in the world surely offers little consolation to victims of crime. Just ask the 39-year-old human resources administration manager who was slapped with a hefty $17,100 bill after three of her credit cards were stolen and used to buy three Rolex watches last year.
Although one of the thieves was later arrested and convicted, the three banks that issued her with those credit cards maintained a common stand that was in line with the typical industry practice adopted by many card issuers: The cardholder would be liable for all unauthorised transactions prior to the bank's receipt of her notification that her card was stolen.
While the banks subsequently waived 25 per cent of the total bill as a final 'goodwill' offer, the issue sparked a debate over cardholders' maximum liability for unauthorised transactions.
To some extent, it can be argued that the $17,100 fraud case and the subsequent debate in the mainstream and online media had provided the impetus for a change to a long-standing policy, in which cardholders would be liable for unauthorised transactions effected prior to the bank being notified of the loss or theft of the credit card.
New measures to limit credit cardholders' liability for unauthorised transactions were announced by the Association of Banks in Singapore (ABS) last September. These measures, which took effect on November 1, included capping card members' liability at $100 for unauthorised transactions, provided the cardholder had not acted fraudulently or was grossly negligent. The ABS also made it clear that in the event that a cardholder was involved in fraud or had acted with gross negligence, he would be liable for 100 per cent of unauthorised charges or amounts up to his credit card limit, whichever is lower.
Prior to the announcement, only American Express and Maybank had liability caps, of $100 and $500 respectively. But according to Mrs Ong-Ang Ai Boon, Director of ABS, the banks had been considering such measures for some time.
"With the increase in credit card usage, it was timely to introduce them. The case (involving the 39-year-old cardholder) affirmed the need for such measures, but also highlighted the need to remind consumers of their responsibilities in safeguarding their credit cards," says Mrs Ong-Ang.
While the introduction of these measures will provide clear directions for the various stakeholders to act responsibly in preventing fraudulent incidents, consumers should note that it does not change the way banks handle situations where a customer has had unauthorised transactions on his lost or stolen cards.
"Whether the customer sufficiently secured his or her card and how quickly the loss was reported still hold much bearing on deciding the customer's liability," says Ms Lynn Gaspar, Head of Lifestyle Credit, OCBC Bank.
