Why You Should NOT Increase Your Credit Card Limit | Credit Card Fraud
Every credit card is set to certain credit limit based on your income level and it varies from person to person.
Basically there are three type of credit card:
- Classic Card
- Gold Card
- Platinum Card
The credit limit for all these are credit cards range from RM4,000.00 to RM35,000.00
Many credit card holders would like to obtain a higher credit card limit in order to get higher purchasing power.
With the RM50 service tax on each principal credit card, charge cards, including free cards and RM25 for supplementary cards on January 1st 2010, some bank has automatically double or increase the credit cards limit in order to retain their customer base.
Accepting the increase credit limit May NOT be the Best Choice!
WHY?
Assuming your increase credit limit is RM18,000, you are liable to RM18,000 even NOT use by YOU in the case of credit cards fraud.
In another word, if you lost your credit card without informing the bank and the theft had spend RM18,000, YOU HAVE TO PAY and LIABLE FOR IT!
Therefore your credit card is like TIME BOMB if it is LOST!
There is a Credit Card Guideline (the Guideline) that limits the liability of a cardholder to RM250 for unauthorised use of lost or stolen cards under certain conditions.
But banks simply ignore this Credit Card Guideline and instead pursue the cardholder for the money.
Read more on Banks Overcharge Consumers by Ignoring the Credit Card Guideline
Where unauthorised transactions are concerned, many banks have often gone against the Guideline on 2 aspects:
Firstly, these banks have been guilty of charging cardholders more than RM250 for fraudulent purchases even when they have fulfilled the conditions set out in Clause 13.2 of the Guideline.
Clause 13.2 says that “The cardholder’s maximum liability for unauthorised transactions as a consequence of a lost or stolen credit card shall be confined to a limit specified by the issuer of credit cards, which shall not exceed RM250.00 provided the cardholder has not acted fraudulently or has not failed to inform the issuer of credit cards as soon as reasonably practicable after having found that his credit card is lost or stolen.”
Yet there are many cases where the cardholder has not committed any fraud and had immediately contacted the bank upon discovery of the loss of the card, but was still held liable for all the unauthorised purchases made before the bank was informed.
The bank will always direct the cardholder’s attention to the clause in the card agreement which states that all transactions carried out before the loss of the card is reported to the bank is to be borne by the cardholder. No mention is made of Clause 13.2 of the Guideline by the bank.
In some cases, the bank may offer to settle the matter if the cardholder pays 60% to 70% of the disputed amount.
The cardholder may take up the offer, thinking that it is the best deal he can get. However, if he has to pay anything more than RM250 he has been cheated.
Secondly, banks are guilty of making cardholders pay for the unauthorised transactions without first proving that the card was indeed used by the cardholder.
Clause 13.3 says that “where the amount imposed on to the cardholder for unauthorized transaction due to lost or stolen credit cards is in excess of the maximum liability limit, the issuer of credit cards has to prove that the cardholder has acted fraudulently or failed to inform the issuer of credit cards as soon as reasonably practicable after having found that his credit card is lost or stolen.”
In other words banks can only charge the cardholder more than RM250 if it can prove that the cardholder acted fraudulently or did not report the loss of the card as soon as practically possible upon discovery that it was missing.
In reality, the opposite happens. It is the cardholder who has to prove to the bank that the transactions were not signed by him.
You are encourage to confirm with your bank on this issue.
Therefore it very important to keep or save the credit card phone number in case of the emergency.
Please be Well inform, Educated and Wise credit card’s user!
Wow! Thanks for this very useful information! As credit card holders, we are always at the mercy of the banks issuing them! So now that I know my rights, I can fight back! : )
Just in case that you’re unaware about the latest High Court ruling on the credit card unauthorised transactions. please refer to this :-
mmail.com.my/content/consumer-victory-chee-court-upholds-rm250-cap-lost-credit-cards
This is a Good news for consumer as justice is served!
Jogger falls victim to credit card-swapping syndicate
KUALA LUMPUR: A tailor was shocked to find someone had entered her car and switched her credit cards with cards which belonged to another person.
The woman, who only identified herself as Ms Tong, 31, from Subang Jaya, said that she had left her car at Taman Tun Dr Ismail Mon’t Kiara park on Sunday before going for a jog.
She came back later to find her car unlocked. However, she was relieved that her purse which she kept under the driver’s seat was still intact. Thinking that no theft had occurred, she left. Later she received a call from her bank requesting her to verify some transactions that she had made.
She was shocked when told that she had purportedly spent RM24,000, and upon checking her purse, she found that her credit cards had been replaced with those belonging to another person.
The incident was related to MCA Public Services and Complaints department head Datuk Michael Chong. “We believe a syndicate is involved They target women who leave their cars to go to fitness centres, or to go jogging.
“The syndicate members will mingle around the parking lots looking for cars and will then open the car doors using duplicate keys. The thieves will not take any valuables but they will replace the owner’s cards with other cards from the same banks,” Chong added.
fr:thestar.com.my/news/story.asp?file=/2010/6/3/nation/6389218&sec=nation
How safe is your credit card?
By RASHVINJEET S.BEDI
The seizure of cloned foreign credit cards, including 70 blank ones, during a raid in a house in Alor Setar recently may be a cause for concern but industry experts say since the implementation of the chip-based cards, it is more difficult for fraud to occur now.
IT was a routine credit card transaction for travel agent Yong Lee Heng (not his real name). After getting clearance from the credit card’s issuing bank for a payment of RM17,000, Yong processed the airline tickets for five African men.
But 26 days after the transaction, the bank called Yong to tell him that the credit card that had been used was forged. The bank then retrieved RM6,000 from his credit account and demanded that he pay the remaining RM11,000.
Yong insists it was unfair to make him pay for a transaction that the bank had approved.
“We are just a travel agency. How would we know if a card was forged?” an agitated Yong argues.
He says the bank is now prepared to offer him a discount and payment by instalment but Yong is having none of that.
His case is just one instance of credit card fraud that is still happening in the country, although it is occuring on a lesser scale now.
According to statistics from Bank Negara, the total amount of credit card fraud in 2004 was around RM68mil. This fell to around RM20mil in 2006, when use of the chip-based cards using Europay-MasterCard-Visa (EMV) standards was implemented.
A Commercial Crimes Investigation Department (CCID) spokesperson says that while credit card fraud is not as severe as before, it is still considered a problem.
Recently, the Kedah CCID seized 137 cloned foreign credit cards, including 70 blank ones, during a raid in a house in Alor Setar. The cards are those cloned from non-EMV cards.
“Cards using magnetic strips are much easier to forge than the chip-based ones,” says the CCID spokesperson.
But the EMV measures have not stopped the still-active syndicates who have come up with new ways of committing fraud (see accompanying story on the modus operandi of credit card fraud syndicates), says the spokesperson.
These include the Card Not Present (CNP), Account Take Over (ATO), false application, replacement of original credit card with another card and the classic case of stealing other people’s cards and using them.
According to Bank Negara, the CNP transactions and unauthorised transactions using lost and stolen credit cards remain the main source of fraud losses, accounting for 57% and 20% of total credit card fraud losses respectively in 2009.
MCA Public Services and Complaints Bureau head Datuk Michael Chong says his office is still receiving complaints of credit card fraud cases. In 2008, the department received 14 reports involving RM76,000; in 2009 it was 13 cases involving RM45,000. So far this year, the department has received five complaints involving RM63,000.
One of the cases involved someone who was in jail when the application for the card was made.
“This is such a big joke. How was his card approved when he was serving his sentence? Banks have to be more stringent in their approval process for credit cards,” Chong says.
He believes banks are fighting for business and might be approving credit cards easily.
A frequent complaint by consumer groups is the fact that banks pre-approve credit cards and send them to customers who did not sign up for them in the first place.
“If credit cards are important, then the banks must make sure the new cardholders collect them personally instead of sending them by mail,” says Chong.
There have also been cases where personal details and signatures of those applying for one credit card have been reused to apply for others.
Chong also highlights incidents where credit cards can be switched, citing the case of a woman whose car was broken into while she was out jogging. As her purse was not stolen, she did not think there was anything to worry about.
Later, Chong relates, the woman received a call from her bank requesting her to verify some transactions she was supposed to have made.
When told she had spent RM24,000, she checked her purse and found her credit cards had been replaced with similar looking cards.
Consumers are now protected if they are victims of credit card fraud, according to the Consumers Association of Penang (CAP). Its president S.M. Mohd Idris says that in 2003, Bank Negara came up with a credit card guideline and clause (13.2) that says banks cannot charge the cardholder more than RM250 for fraudulent transactions if the cardholder is not a party to the fraud and the loss of the card was reported as soon as possible.
The clause says that where the amount in dispute is more than RM250, then the onus is on the bank to prove that the cardholder has acted fraudulently or failed to inform the banks as soon as reasonably practicable upon discovery of the loss.
“In reality, the cardholder has to try to prove that the transactions were not done by him. Even then the bank will say he is responsible for all transactions carried out before the loss is reported to the bank,” says Idris.
In June 2009, the KL High Court judge held that the Bank Negara guideline “had the force of law” and that the guideline limited the liability of the cardholder to only RM250 where loss is reported promptly.
Idris says that before the High Court ruling, cardholders ended up paying more than the RM250.
Even big businesses are victims of credit card fraud.
Johan Aris Ibrahim, head of Financial Services and Loyalty, AirAsia, says that although credit card fraud is on a low side (below 1%) compared to the size of its business, they are continuously aiming for zero fraud.
He says that since 80% of AirAsia’s revenue is derived from Internet bookings, the management places high importance to keeping credit card fraud transactions at a minimum.
Johan says the company has a Credit Card Fraud Control Unit (CCFCU) operating 24/7 to detect fraudulent credit card transactions and they liaise closely with all the banks in Malaysia to verify suspicious transactions.
AirAsia, meanwhile, is encouraging their cardholders to activate the 3-D Secure feature on their credit cards with their respective banks. Johan explains that once activated, the bank will text the card holder the 3-D Secure pin. Cardholders will then be requested to input their 3-D Secure pin for every online transaction
“This will prevent fraudulent credit card transactions in case the credit card gets stolen,” says Johan.
However, according to research house Lafferty Group, payment card fraud and attempted fraud rates in Malaysia have dropped substantially following the migration from magnetic stripe to chip-based ATM cards and EMV standards on credit cards as well as the introduction of additional security measures for Internet banking.
“Cloning is a far less serious issue than before the adoption of EMV,” says Andrew Neeson, who heads the Cards and Payments and Consumer Finance Research section at Lafferty Group.
Despite this, says Neeson, combating fraud and financial crime is an unrelenting battle for the global retail banking and cards and payments industry as fraudsters will always attack what they perceive to be the weakest area of defence.
“Phishing attacks are a major issue in credit card fraud as they enable criminals to fraudulently acquire consumers’ user names, passwords and credit card details. Phishers have expanded their reach to web infrastructure sites such as domain registrars and hosting services,” he says.
He adds that banks and payment networks are fighting back against fraud with the two-factor authentication process.
For example, Visa Europe has announced that its Visa CodeSure online payment initiative is now fully available for commercial launch after a number of consumer pilots and rigorous testing with European banks.
Neeson says the Visa CodeSure system improves online security by providing a Visa card with an alpha-numeric display and 12-button keypad and battery that is embedded in the card.
“The payment network explains that as cardholders are required to enter their PIN for every online transaction, the CodeSure card will prevent any unauthorised use,” he says.
He adds that MasterCard Europe has also unveiled a debit card with a built-in display window and touch-sensitive button that can provide cardholders with information, such as a dynamic passcode and account balance.
fr:thestar.com.my/news/story.asp?file=/2010/8/15/focus/6816685&sec=focus
Many ways to trick cardholders
The Commercial Crimes Investigations Department (CCID) says credit card fraud can occur in several ways.
1. ATO (Account Take Over)
Police believe that insiders provide details of credit cards to the syndicates. Members of these syndicates then contact the “card centre”, reporting that the cards are lost and that they are the rightful owners. They then request a change of address. Banks post the replacement cards to the new address.
2. CNP (Card Not Present)
Using other people’s credit card account numbers to purchase goods or services (such as air fl ight tickets or reserving hotel rooms) via the Internet. The credit card account numbers and the CW/CVC numbers are obtained through cashiers in shopping complexes, hotels and other commercial areas.
3. False Application
Applications are made by falsifying identity card numbers, pay slips and employer certifi cation letters. Syndicates use unoccupied premises as the address for correspondence.
4. Stealing other people’s cards and using them
There are cases where credit cards are stolen and used in many places especially fuel stations.
5. Replacement of original credit cards with another card
When the customer pays with a credit card, the cashier will return a similar looking card to him or her . The customer only fi nds out that the card has been switched when he receives the credit statement with purchases he has not made included in it.
fr:thestar.com.my/news/story.asp?file=/2010/8/15/focus/6814829&sec=focus
A campaign to educate credit card issuers
A QUESTION OF BUSINESS By P. GUNASEGARAM
IT is interesting to note that the National Cards Group – a grouping of Malaysian credit card issuers, mainly banks – has launched a campaign to inculcate responsible credit card usage among consumers.
They have called the campaign Swipe Smart with 6E, 6E being the so-called six enablers – educate yourself, exercise caution, enhance your lifestyle, enjoy the benefits, eliminate debt and engage with your card issuer.
Well and good. One should not pour cold water on such a noble deed by the card issuers to ensure that their customers are educated and know how to use the card responsibly without getting themselves – and in the longer run the issuers – into trouble.
It was good to see too that there were representatives from Bank Negara, the Federation of Malaysian Consumer Associations (Fomca), the Association of Banks and others there.
The only thing that was lacking was a similar campaign for card issuers, yes, you read right, the card issuers. You see, the credit card problem is a double-edged sword – both the behaviour of issuers and users contributes to delinquency. Eventually, if things really get bad, both sides will suffer – the users may become bankrupt and the banks may be saddled by high bad debts.
Both parties have to be responsible and there has to be a balance of profit with responsibility. There is a need to educate the card issuers too to, using the words of the National Cards Group but applied to itself this time, to inculcate responsible credit card issuance among card issuers.
We will even call the campaign by the same name – Swipe Smart with 6E – with its own six enablers. We hope, Fomca, who was present there, will take the cudgels up on behalf of the consumers, call the issuers and launch this campaign.
Here is our proposed 6E campaign directed at card issuers:
1. Eliminate profiteering such as late payment charges. We have written about this before. The effective interest rates on this are extortionate and exorbitant. If you are late by one day on an outstanding balance of RM100 (even if your credit limit is RM100,000!) the charge is RM50. That’s 50% a day or 18,250% a year! Now what entitles the bank or issuer to charge you such an interest rate when your credit limit is RM100,000 and you have an unutilised portion of this of RM99,900? If that is not profiteering, what is?
2. Ease up on your interest rates. Most of us pay 18% a year on balances outstanding when the fixed deposit rate is not even nudging 3%. They take your money at 3% or less, then lend it back to you for 18%! Housing loans are at 6%, why is the credit card interest rate three times that at 18%, a rate that only licensed money lenders charge?
3. Exercise restraint in your marketing. These days, have one credit card and other issuers deluge you with cards and offers. Sometimes they send a card to you that you don’t want and then three months later bill you for service charges! Then I have to call them – it takes ages to get through with a robot asking you whether you want to do this or that before you finally get through – and demand they withdraw their statement. And then they offer credit cards to all manner of people who don’t know how to use them or abuse the credit lines, so long as they have a regular salary – civil servants are great targets. And because they have a salary, the banks can get their money back – with huge penalties to boot.
4. Engage with your customer. Before they send us all that unwanted promotional material, the issuers should ask us if we want them. They should remind us – constantly – that outstanding balances cost us 18% a year, the highest rate of any bank facility, and if I am not mistaken, the highest possible legal lending rate.
5. Educate yourself on social and ethical responsibilities. Yes, we know profits are all important and yes we know there are a lot of ignorant people out there from whom money can be made. But don’t financial institutions have a social and financial responsibility to their customers, especially people, and to inform them fully of how they make money from them? If issuers want to educate the public on the dangers of credit cards, they should educate themselves on immoral behaviour and how the drive to profit stops them from truly educating the general public.
6. Explain all your charges and actions fully. I have not yet found an issuer who advertises that the penalty charge for late payment is as high as nearly 20,000% a year. Perhaps they should print this on the envelopes they mail to customers. And how many people know that many credit cards issuers impose a service charge on overseas spending, have unfavourable exchange rates for transactions, and have service fees for interest-free instalment payments? Can they tell us why they are not pushing debit cards (no interest here, the funds are transferred directly from your bank account) equally hard? The list goes on. It is time, if the issuers wanted to educate the public, for them to take huge full-page advertisements to fully disclose all their charges in the simplest possible language. If they can’t find anybody to write the copy for them in simple language, I volunteer to do it for free.
Well, that’s our 6E Campaign aimed at educating our banks and other card issuers in brief. We hope somewhere out there some consumer organisation will take up this case and that the authorities will sit up and take notice and realise that issuers too contribute to the credit card problem.
■ Managing editor P Gunasegaram notes with some trepidation the following figures for credit card usage in Malaysia: there are 9 million cards and the average transaction through cards is RM211mil a day or RM77bil a year. That’s a lot of potential for some to make a lot of money and a lot of others to lose some.
fr:thestar.com.my/columnists/story.asp?file=/2010/10/30/columnists/aquestionofbusiness/7329316&sec=A Question Of Business
Of educating credit card issuers and users
P. Gunasegaram’s article entitled “A campaign to educate credit card issuers” is interesting.
But another important interest charge also needs to be highlighted. Do you know that if you do not make full payment on or before the due date, you lose the 20 days credit free period for both the current and new transactions posted on the statement?
In addition to the RM50 late payment charge, the finance charge is even higher.
For example: You receive the September statement on Oct 5 and the outstanding charge is RM1,200 and you need to settle it by Oct 20.
Say for some reason or the other, you overlook the matter and do not settle the outstanding in full by Oct 20. How much is your finance charge?
Let’s assume you settle the full outstanding of RM1,200 on Nov 5. You’d expect the bank to charge a finance charge of 17.5% pa based on daily calculation from Oct 20 to Nov 5, right?
Wrong. The bank will compute the interest outstanding from the transactions posted date till Nov 5.
In addition, all the new transactions will also attract interest charge. In short, the bank is penalising you twice on the old and new transactions.
If you do not settle the outstanding in full before due date, you lose the 20 days interest free period.
As such, the campaign should also educate the public to settle the full outstanding amount by due date. Banks, of course, will not highlight this point to the public. It’s one of their main revenue streams.
A wary reader
fr:biz.thestar.com.my/news/story.asp?file=/2010/11/6/business/7356554&sec=business