Credit card fraud has been a problem for a long time. With many online shopping websites such as those of online travel agencies and airlines getting hacked and customer data stolen, the situation pertaining to card fraud, especially that happening online, is only getting worse.
If the card owners report the fraud immediately once they discover a spurious charge, they are not liable for the loss, in most cases.
So who has to shoulder the costs?
According to credit card terms, merchants are required to assume responsibility if there is credit card fraud.
Users are now requested to key in a password when they use China’s Unionpay cards. But most credit cards issued in Hong Kong still do not require password. Criminals can steal others’ credit cards and swipe them with just a signature.
While consumers’ rights are protected, who is going to protect the merchants?
Another factor that leads to rampant credit card fraud is ineffective enforcement. Hong Kong police usually won’t follow up on cases involving small sums even if the merchants report to the police.
It’s hard for brick and mortar average merchants to detect fraudulent cases, not to mention online shops.
I believe the responsibility should fall on the Hong Kong Monetary Authority.
The quasi-central bank should regulate issuing banks and discourage them from asking merchants to sign unfair contracts.
This article appeared in the Hong Kong Economic Journal on March 19
Translation by Julie Zhu
[Chinese version 中文版]
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