Who’s to blame in the credit card game?

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WHEN CREDIT FRAUD TAKES PLACE…
Who’s to blame in the credit card game?
WHEN credit card fraud takes place, the finger-pointing game begins.
By Bryna Sim
07 August 2009

WHEN credit card fraud takes place, the finger-pointing game begins.

Who is to blame?

Banks, consumers, or retailers?

Not us, says the Singapore Retailers Association.

Its executive director, Ms Lau Chuen Wei, said: ‘The job of a retailer, especially the one at the front line, is indeed onerous.

‘Let’s not make it even more difficult for retailers by scaring away retail workers with the threat of punishment, for seemingly not being vigilant enough to spot a stolen credit card.’

But shouldn’t retailers bear some responsibility in helping to cut down credit card fraud, consumers asked.

They were respondents in a poll of 50 merchants and 50 credit card holders conducted by The New Paper.

And how difficult can it be for retailers to check the credit card against a photo identification card?

The poll results suggest that the majority of retailers and consumers like the idea of credit cards with a photo of the holder.

That would take out the inconvenience of needing a secondary form of identification.

The question of liability arose after local newspapers reported Madam Tan Shock Ling’s complaint that crooks had chalked up $17,000 on three of her credit cards.

The 39-year-old human resource administration manager had lost her credit cards and reported the loss only when she got a call from the Royal Bank of Scotland (RBS) on 12 Jun.

The bank asked her if she had bought a Rolex watch 10 minutes earlier.

Madam Tan was moving house that day and did not know till then that her wallet had gone missing.

She had handed her handbag containing her wallet to her husband, who is believed to have left it in the car while running errands.

Madam Tan found out that two other cards belonging to her – issued by United Overseas Bank (UOB) and Citibank – had also been used to buy a Rolex each.

Madam Tan was later told by the credit-card issuers that she had to pay for these unauthorised transactions, because they took place before she reported the loss of her cards.

From her case, it seemed as though consumers would be held responsible even when they were victims of credit card fraud.

The New Paper conducted an experiment in which two Chinese women used a credit card belonging to an Indian man and published a report on 1 Aug on how retailers did not check to see if the buyer matched the credentials of the cardholder.

The New Paper conducted a follow-up poll to find out what more can be done.

The results showed that retailers were reluctant to take responsibility for credit card fraud.

Out of the 50 retailers polled, only 6 per cent felt that they ought to shoulder the blame.

Only 4 per cent felt that all three parties – banks, cardholders and retailers – should share the responsibility of credit card fraud.

‘We shouldn’t have to bear the costs of fraudulent charges, especially if the Government is trying to promote a cashless society,’ said shop owner Francis Tan, 39.

But how difficult can it be to simply ask for photo identification?

Some retailers felt that conducting checks prior to approving purchases was a hassle.

‘We are often very busy and hundreds of card transactions occur every day, so it is troublesome to check every transaction,’ said a 35-year-old shop assistant who wanted to be known only as Ms Lee.

Many retailers felt customers and banks should be responsible for fraud.

‘A credit card is like a cardholder’s ID, so cardholders should be responsible for it,’ said shopowner Joyce Tham, 45.

Different view from customers

Consumers disagreed.

Out of the 50 consumers polled, only 12 per cent felt they should bear the responsibility for fraud.

Twenty-two per cent of the consumers pointed their fingers at the retailers while 36 per cent of them wanted the banks to bear the most responsibility. Thirty per cent wanted all three to share responsibility.

‘Sometimes, retailers do not bother to check my signature at all,’ said housewife Salmah Abdullah, 51, who felt that retailers ought to conduct checks to make sure the cardholder and purchaser’s identity tally. Others such as an office manager who wanted to be known only as Ms Lim, 38, felt that banks should bear the cost of credit card fraud.

‘If they want customers to subscribe to them, then they ought to protect their customers,’ she said.

Based on the poll results, it appears that both consumers and retailers want banks to do more.

Forty-three per cent of the retailers and 64 per cent of the consumers polled regarded it as the responsibility of banks to purchase insurance against fraud.

Said Ms Tham: ‘Banks should buy insurance on behalf of their customers as a value-added service, to protect their customers against credit card fraud.’

A whopping 88 per cent of retailers and 76 per cent of consumers also felt banks should inform their customers for purchases above $5,000.

Businesswoman W C Lim, 58, even felt banks should call up cardholders for purchases above $2,000.

‘It’s safe that way,’ she said.

Singapore Management University Assistant Professor of Marketing, Kapi Tuli, felt retailers are likely to resist the idea of bearing the cost of credit card fraud.

‘Credit card fraud prevention is not usually considered the responsibility of the retailer,’ he said.

Others such as Mr Leong Sze Hian, president of the Society of Financial Service Professionals, feel it is impractical to expect retailers to ensure that every single card matches the identity of the purchaser.

‘If someone really wanted to use your credit card, he or she would have spent ages practising forging your signature,’ he said.

With additional reporting by Pearly Tan and newsroom interns Ervina Mohamed Jamil, Naveen Kanagalingam and Jovita Chua

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