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Tuesday, Oct 08, 2024
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Banks urged by govt to be empathetic in assisting victims of credit card fraud
The government on Wednesday urged the banks to adopt a "pragmatic and empathetic approach" to assist customers whose credit cards were used for fraudulent purchases and stated two new circulars had been issued to ensure fair treatment and customer protection.
As the number of credit card fraud cases recorded an increase of 45.1 percent this year as compared to the previous one, some of the card-issuing banks refused to waive liability for fraudulent large-value purchases made with cards that have been stolen and used on the ground of "gross negligence."
Responding to the situation, acting Secretary for Financial Services and the Treasury Joseph Chan Ho-lim said the Hong Kong Monetary Authority (HKMA) has been working with the banking industry and credit card associations to monitor the latest trend of credit card frauds closely.
He said HKMA had required banks concerned to handle the unauthorized credit card transactions and scam complaints appropriately and assist customers in raising chargeback requests based on the actual circumstances.
Additionally, two new circulars regarding the principles for handling unauthorized payment card transactions and binding cards for contactless mobile payments were issued to banks last week.
Chan said that the new guideline reiterates that banks should adopt a pragmatic and empathetic approach to assist customers and handle cases regarding credit card fraud. It also reaffirms that banks must have proper systems and controls to prevent, detect, and respond to fraudulent transactions. Besides, banks should also consider the actual circumstances and background of customers (e.g., customers of disadvantaged groups).
The banks were also asked to perform additional authentication for binding credit cards to new mobile payment apps, apart from issuing a one-time password, so as to confirm that the customer has actually given such binding instructions.
Chan added that HKMA has set up a task force with the Hong Kong Association of Banks in early 2023 to explore measures to strengthen the protection of credit card customers and how to handle credit card scams more efficiently.
Responding to the situation, acting Secretary for Financial Services and the Treasury Joseph Chan Ho-lim said the Hong Kong Monetary Authority (HKMA) has been working with the banking industry and credit card associations to monitor the latest trend of credit card frauds closely.
He said HKMA had required banks concerned to handle the unauthorized credit card transactions and scam complaints appropriately and assist customers in raising chargeback requests based on the actual circumstances.
Additionally, two new circulars regarding the principles for handling unauthorized payment card transactions and binding cards for contactless mobile payments were issued to banks last week.
Chan said that the new guideline reiterates that banks should adopt a pragmatic and empathetic approach to assist customers and handle cases regarding credit card fraud. It also reaffirms that banks must have proper systems and controls to prevent, detect, and respond to fraudulent transactions. Besides, banks should also consider the actual circumstances and background of customers (e.g., customers of disadvantaged groups).
The banks were also asked to perform additional authentication for binding credit cards to new mobile payment apps, apart from issuing a one-time password, so as to confirm that the customer has actually given such binding instructions.
Chan added that HKMA has set up a task force with the Hong Kong Association of Banks in early 2023 to explore measures to strengthen the protection of credit card customers and how to handle credit card scams more efficiently.
