Reply to Parliamentary Question on wholesale insurance for banks and credit card issuers to permit easier write-offs for smaller transaction amounts
QUESTION NO 794
NOTICE PAPER 291 OF 2021
FOR ORAL ANSWER
Date: For Parliament Sitting on 4 March 2021
Name and Constituency of Member of Parliament
Assoc Prof Jamus Jerome Lim, MP, Sengkang GRC
To ask the Prime Minister in light of the rise in fraudulent credit card transactions, whether the Government has considered encouraging more widespread wholesale insurance for banks and other credit card issuers that will permit easier write-offs for relatively smaller transaction amounts.
Answer by Mr Ong Ye Kung, Minister for Transport, on behalf of Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:
1. Associate Professor Jamus Lim asked if banks and credit card issuers should be encouraged to obtain wholesale insurance cover for card fraud losses, so that they can write-off smaller losses incurred as a result of fraud.
2. There is little demand from credit card issuers to purchase insurance to cover fraud-related losses arising from their credit card portfolios.
3. Instead of insurance, which will lead to higher costs for consumers, it is more important for credit card issuers and customers to play their respective parts in preventing fraud.
4. Credit card issuers such as banks have invested considerable resources in building fraud surveillance systems and controls to combat card fraud. These systems have been enhanced over the years in response to changing technologies and methods used by the fraudsters. Today, major banks share fraud trends with one another, enabling them to continually refine fraud rules to tackle the latest fraud techniques.
5. Customers should keep their cards safe and immediately report to their issuing banks if they lose their cards. A timely report will cap a customer’s liability at $100 unless he is subsequently found to have acted fraudulently or negligently. For online payments, customers should not disclose credit card details or One-Time PIN (OTP) to anyone, and should practise strong cyber hygiene such as by regularly updating the security patches and anti-malware software on their devices. For unauthorised payments to merchants that are not secured by OTP, banks have the right to recover the lost amounts fully from the merchants, and hence customers will not bear any loss.
6. We will continue to monitor the fraud situation and ensure that banks do their part to provide their customers with clear steps to take in order to protect themselves from such losses. In addition, the industry Code of Practice for Banks on Credit Cards issued by the Association of Banks in Singapore (ABS), which sets out the liability of cardholders under various circumstances, is currently being reviewed to consider emerging scenarios for fraud and further risk mitigating measures.