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Tuesday, May 28, 2024

Banks get push over card fraud

Banks get push over card fraud

Two new guidelines have been issued for banks to enhance the safety of credit card use amid a surge in fraud cases and unauthorized transactions.
In a written reply to a Legislative Council member yesterday, acting secretary for financial services and the treasury Joseph Chan Ho-lim said banks have been told that, in addition to issuing an SMS one-time-password, they are required to perform additional authentication for binding of credit cards to a new mobile payment app, so as to confirm customers' instructions over a pending transaction.

Chan said 229 complaints against unauthorized transactions were received by the Hong Kong Monetary Authority in the first four months this year, down 162 compared with the same period last year, but still triple that of 2020, when it was 88 cases.

Ronick Chan Chun-ying, who represents the finance sector, said some banks refused to waive cardholders' liability for fraudulent large-value purchases made with cards that have been stolen on the ground of "gross negligence."

He asked whether the authority could clarify "gross negligence" and adopt new rules to protect credit card users.

Joseph Chan said the Monetary Authority requires banks to handle the unauthorized transactions and scam complaints appropriately and assist customers in raising chargeback requests based on circumstances.

Additionally, two circulars outlining the principles for handling unauthorized transactions and binding cards for contactless mobile payments were issued last week.

He said that under the new guideline, banks are required to adopt a pragmatic and empathetic approach to assist customers, such as considering the circumstances and background when handling cases.

If customers have been vigilant with card information and yet have been victims of fraud, banks should take their efforts into consideration, he said.

Additionally, banks are asked to conduct extra authentication beyond sending a one-time password when binding a credit card to a new mobile payment app.

Regarding education on preventing fraud, Joseph Chan said the HKMA has collaborated with police and the banking sector to proactively combat financial fraud.

"The HKMA, the police and major retail banks have formed the fraud and money laundering intelligence taskforce to identify and report suspicious accounts through information sharing and data analytics," he said.

The HKMA and the force cohosted a session with representatives from retail banks on April 21 to explore innovative approaches to anti-deception, he added.

The authority also supported the launch of an anti-fraud search engine "Scameter" by the police.
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