<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Why new card liability limit won't fuel fraud
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to Tuesday's letter by Mr Paul Chan, 'Card fraud very low here: 'Co-payment' not necessary'. It refers to a March 2009 Nilson Report and says: 'Stolen card frauds worldwide are about 7 per cent of total transactions.'
This compares to credit card fraud in Singapore, which it says is 'among the lowest in the world, with card fraud rate of 0.02 per cent', according to the Association of Banks of Singapore. These numbers show worldwide fraud is 350 times higher than Singapore's.
From Nov 1, banks here will change their policy and limit losses to the first $100 of unauthorised charges. While it is good for consumers, the high worldwide fraud is a concern. Will Singapore's fraud rate also jump to that level?
It will not. Why? Because the statistics are wrong. Singapore's fraud rate is indeed the lowest in the world (0.02 per cent), but fraud rates in countries with card liability limits are also low (0.07 per cent). They are not 7 per cent as stated in Mr Chan's letter.
The Nilson Report says that credit card fraud is 7 cents per US$100. That figure is 0.07 per cent and not 7 per cent. It is only 3.5 times Singapore's 0.02 per cent fraud rate and not 350 times.
It shows that fraud rates both here and worldwide - 0.02 and 0.07 per cent respectively - are negligible and not statistically different from each other.
It means the banks' 40-year policy of making consumers pay has not resulted in a lower rate of credit card fraud in Singapore. In fact, the data shows it has made no difference.
We should also not congratulate the banks too much on their sudden enlightenment. Their hand was forced by public opinion and they are late to make the change. Malaysia has imposed a $100 cap on unauthorised charges since March 2003.
Its policies in this area remain ahead of ours and since July 1 last year, Malaysia's Central Bank has limited credit card interest rates to 17.5 per cent. For cardholders with a history of paying their bills on time, the ceiling is 13.5 per cent.
Malaysia's two-tier ceiling is wonderfully creative and helpful to consumers. It compares to our credit card interest rate ceiling of 24 per cent.
Larry Haverkamp
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to Tuesday's letter by Mr Paul Chan, 'Card fraud very low here: 'Co-payment' not necessary'. It refers to a March 2009 Nilson Report and says: 'Stolen card frauds worldwide are about 7 per cent of total transactions.'
This compares to credit card fraud in Singapore, which it says is 'among the lowest in the world, with card fraud rate of 0.02 per cent', according to the Association of Banks of Singapore. These numbers show worldwide fraud is 350 times higher than Singapore's.
From Nov 1, banks here will change their policy and limit losses to the first $100 of unauthorised charges. While it is good for consumers, the high worldwide fraud is a concern. Will Singapore's fraud rate also jump to that level?
It will not. Why? Because the statistics are wrong. Singapore's fraud rate is indeed the lowest in the world (0.02 per cent), but fraud rates in countries with card liability limits are also low (0.07 per cent). They are not 7 per cent as stated in Mr Chan's letter.
The Nilson Report says that credit card fraud is 7 cents per US$100. That figure is 0.07 per cent and not 7 per cent. It is only 3.5 times Singapore's 0.02 per cent fraud rate and not 350 times.
It shows that fraud rates both here and worldwide - 0.02 and 0.07 per cent respectively - are negligible and not statistically different from each other.
It means the banks' 40-year policy of making consumers pay has not resulted in a lower rate of credit card fraud in Singapore. In fact, the data shows it has made no difference.
We should also not congratulate the banks too much on their sudden enlightenment. Their hand was forced by public opinion and they are late to make the change. Malaysia has imposed a $100 cap on unauthorised charges since March 2003.
Its policies in this area remain ahead of ours and since July 1 last year, Malaysia's Central Bank has limited credit card interest rates to 17.5 per cent. For cardholders with a history of paying their bills on time, the ceiling is 13.5 per cent.
Malaysia's two-tier ceiling is wonderfully creative and helpful to consumers. It compares to our credit card interest rate ceiling of 24 per cent.
Larry Haverkamp
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