<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Card fraud: Banks not doing enough
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to the letters, 'Customers are the first line of defence' by the Association of Banks in Singapore and 'Safeguarding accounts a collective process' by Citi Singapore (Aug 3), and wish to point out that the two organisations should think again if the banking industry sincerely considers credit cardholders 'valued customers'.
Looking at the bank-customer relationship from a purely commercial viewpoint, I beg to differ.
Despite the economic downturn, United States issuers of Visa, MasterCard and branded consumer cards still managed to post a solid profit.
Cards&Payments data shows that issuers last year posted collective after-tax profit or return on assets of US$17.71 billion (S$25.5 billion).
Although I do not have profit figures of Singapore banks, this data clearly explains why banks should be the first line of defence in each credit card transaction to prevent unauthorised use.
First, at the point of transaction, the two parties that derive profit from cardholders are the merchants and banks.
Customers cannot be faulted for negligence by merchants to verify signatures on credit cards, or for the banks' failure to implement an effective foolproof secondary security mechanism to protect cardholders.
Second, approving payments for unauthorised transactions cannot be the responsibility of genuine cardholders because they are not there physically to be alerted.
When the onus is on the bank and the merchant to prevent fraud, is it fair to say 'valued customers' are the first line of defence to protect their interest? At each point of transaction, it is the obligation of banks to safeguard the accounts first.
Third, are current fraud detection systems by banks to monitor card usage on a real-time basis effective and exhaustive? Why do banks not use additional security measures such as personal identification numbers, photos on cards and SMS notification to reconfirm transactions above a certain amount?
Do banks consider the use of analysts to 'review suspicious transactions and contact customers to verify and validate high-risk or value transactions' to be 'strong fraud management practices'?
Last but not least, losing a purse with credit cards is not negligence. Losses due to failures to detect fraud at the point of transaction are accepted as part and
parcel by the payments industry worldwide. That is why US federal law limits lost-card liability of cardholders to US$50. Singapore should follow suit.
Paul Chan
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->I REFER to the letters, 'Customers are the first line of defence' by the Association of Banks in Singapore and 'Safeguarding accounts a collective process' by Citi Singapore (Aug 3), and wish to point out that the two organisations should think again if the banking industry sincerely considers credit cardholders 'valued customers'.
Looking at the bank-customer relationship from a purely commercial viewpoint, I beg to differ.
Despite the economic downturn, United States issuers of Visa, MasterCard and branded consumer cards still managed to post a solid profit.
Cards&Payments data shows that issuers last year posted collective after-tax profit or return on assets of US$17.71 billion (S$25.5 billion).
Although I do not have profit figures of Singapore banks, this data clearly explains why banks should be the first line of defence in each credit card transaction to prevent unauthorised use.
First, at the point of transaction, the two parties that derive profit from cardholders are the merchants and banks.
Customers cannot be faulted for negligence by merchants to verify signatures on credit cards, or for the banks' failure to implement an effective foolproof secondary security mechanism to protect cardholders.
Second, approving payments for unauthorised transactions cannot be the responsibility of genuine cardholders because they are not there physically to be alerted.
When the onus is on the bank and the merchant to prevent fraud, is it fair to say 'valued customers' are the first line of defence to protect their interest? At each point of transaction, it is the obligation of banks to safeguard the accounts first.
Third, are current fraud detection systems by banks to monitor card usage on a real-time basis effective and exhaustive? Why do banks not use additional security measures such as personal identification numbers, photos on cards and SMS notification to reconfirm transactions above a certain amount?
Do banks consider the use of analysts to 'review suspicious transactions and contact customers to verify and validate high-risk or value transactions' to be 'strong fraud management practices'?
Last but not least, losing a purse with credit cards is not negligence. Losses due to failures to detect fraud at the point of transaction are accepted as part and
parcel by the payments industry worldwide. That is why US federal law limits lost-card liability of cardholders to US$50. Singapore should follow suit.
Paul Chan
