Parliamentary Replies
Published Date: 14 September 2009

Reply to PQ on Liability of Credit Card Holders

Question No. 144
Notice Paper No. 186 of 2009
For Oral Answer

Date: For Parliament Sitting on 14 September 2009

Name and Constituency of Member of Parliament
Mr Lim Biow Chuan, MP for Marine Parade GRC


To ask the Senior Minister whether the Monetary Authority of Singapore will consider regulations to limit the liability of credit card holders whose credit cards were lost or stolen and unauthorised transactions on these credit cards had been made.

Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman:

1. Mr Lim Biow Chuan has asked if the Monetary Authority of Singapore (MAS) will consider regulations to limit the liability of credit card holders whose credit cards were lost or stolen, and where unauthorised transactions were made on these credit cards.

2. On 4 September 2009, the Association of Banks in Singapore (ABS) announced new measures to further limit credit cardholders' liability arising from unauthorised transactions made with lost or stolen cards. The new measures complement current practice where banks have in place fraud detection systems to alert cardholders of suspicious or high risk transactions and conduct investigations to determine liabilities for unauthorised charges.
3. ABS has stated clearly that if a lost or stolen credit card is used for unauthorised transactions prior to the cardholder notifying the card issuing bank of the loss, the cardholder will only be subject to a maximum liability of $100. This is provided the cardholder informed the card issuer of the loss as soon as reasonably practicable after being aware that his credit card has been lost or stolen and has not acted fraudulently, or with gross negligence. In a situation where a credit card is not lost or stolen, but the card details were used for unauthorised transactions, ABS has reiterated that cardholders will not be held liable as long as they have not acted fraudulently or with gross negligence.

4. These new measures take effect from 1 November 2009, and will be incorporated into the ABS Code of Consumer Banking Practice. The Code of Consumer Banking Practice describes the standards of service and conduct expected of ABS member banks. It also serves as a benchmark to help consumers determine whether their bank is providing them with services that meet the standards articulated in the Code.

5. MAS welcomes the steps taken by ABS and its member banks to implement these new measures through the ABS Code of Consumer Banking Practice. They establish clear and reasonable rules on the respective responsibilities and liabilities of banks, merchants and cardholders for unauthorised transactions conducted through lost or stolen credit cards. At this time, MAS does not consider there is a need to implement regulations in this area.

6. It is inevitable that there will be instances of credit card fraud.  While Singapore has one of the lowest levels of credit card fraud in the world, this statistic would be of little comfort to someone who has been the victim of such fraud.  Preventing credit card fraud is the shared responsibility of banks, merchants and customers.  ABS has reiterated that when card issuing banks are informed by cardholders of unauthorised charges, the issuing banks will ensure that appropriate investigations are carried out to determine responsibility and liability for the unauthorised transactions. Where it is determined that fraud is due to the merchant’s negligence, the bank can withhold payment, and the merchant will have to be responsible for the unauthorised charges.

7. MAS has announced that it has been engaging banks and card brands in exploring enhancements to credit card security, and is considering the implementation of dynamic authentication for "card-not-present" transactions, and the adoption of a chip technology platform. MAS is looking at a phased introduction of some initiatives in the first quarter of 2010. For example, a one-time-password (OTP) may be required for online transactions as an added layer of authentication, obtained via tokens or an SMS from the card issuing bank. 

8. At the same time, cardholders should continue to take care of their credit cards and to protect themselves against credit card fraud. For example, credit cards should be treated like cash and kept safe, and credit card details should not be given to unknown parties. MoneySENSE will continue to work with ABS and the Consumers Association of Singapore (CASE) to educate consumers on what they can do to protect themselves against credit card fraud. In the next few weeks, ABS and CASE, with support from MoneySENSE, will run radio programmes to highlight how consumers can safeguard their credit cards.