Credit cards: Don’t let the banks go scot-free
SEE ALSO: Grossly inadequate protection for credit card users by the editor.
ST letter by Liew Yeng Chee, 24 Aug 2009
I REFER to last Wednesday’s letter by Mr Fong Sau Shung, ‘Card fraud: Users ultimately responsible’.
The question is not who is ultimately responsible for what. The question is, has due diligence been exercised to protect the cardholder from loss that is not his fault?
One may lose one’s card, but since a card is not cash, procedures must be in place to prevent someone from using it unlawfully. If the procedures are not sufficient to do that, better ones must be implemented.
For example, in addition to signing the receipt, the cardholder could key in a password in a special device for verification, or have a photo on the card for identification.
Don’t use the ‘ultimate’ logic to put all responsibility on the cardholder and let the banks go scot-free.
Credit cards are a huge business. If banks do not invest in a better system to protect cardholders, then, sooner or later, they will be in trouble.
A good example is the 130 million card numbers stolen online in the United States. I wonder how the banking industry will deal with such cases.
Liew Yeng Chee
ST letter (online) by Paul Chan, 24 Aug 2009
I REFER to last Wednesday’s letter by Mr Fong Sau Shung, ‘Card fraud: Users ultimately responsible’ and wish to point out that it is not so. The payments industry is a huge and profitable business. The most attractive selling point is convenience for cardholders so they do not have to carry large amounts of cash. The convenience comes at a price for cardholders and the payments industry. The advent of electronic payment systems should benefit both participating parties equally.
Instead of hardcopy signature verification by merchants in the old days, banks now approve payments on behalf of cardholders instantly based on validity of a card, apparently without verifying the ‘authorised signature’. Here the fundamental shift from cardholder’s signature in each transaction to complete trust by the bank in its own card means banks must have sufficient security measures to protect cardholders. This shift to ease their operations is at the expense of cardholders. This marginalises cardholders’ safeguard and encourages fraud.
The cheque payment system is the best example of responsibility by banks to approve payments on behalf of customers. Here the genuine ‘authorised signature’ is the approving authority to pay. If in doubt, the bank will call the customer to verify before making payment. Banks are responsible for their cheque books. It matters if it is a forged cheque or not as the bank is solely responsible for the loss.
Security measures, first, second and even third, to protect the interests of customers are the business of banks and the payments industry worldwide. Biometric fingerprint reading, SMS reconfirmation, photo on card, and personal identification numbers are additional security measures.
Banks should be innovative and proactive in installing additional security systems to create a critical mass. The key word is user-friendly and ease of facility at point of transaction.