KUDOS to the Association of Banks in Singapore for overturning a longstanding policy which made cardholders liable for all charges incurred on lost or stolen cards before they were reported missing.

Although no reasons were given for the switch in stand, it is likely that the letters to The Straits Times Forum page contributed to this positive change. It is heartening to know that banks do listen seriously to consumers' feedback.

From Nov 1, cardholders' liability will be capped at $100, provided they are not negligent or fraudulent, and notify the banks as soon as they discover the loss.

However, with this policy, how will banks deal with the expected increase in the number of fraud cases? What measures are in place against an individual who tries to cheat banks by claiming his card was stolen after going on a buying spree?

There is bound to be a rise in the number of cases of lost cards as well. How will the banks determine whether it was due to the cardholder's negligence or not?

With online shopping becoming more prevalent, identity thefts will increase. In most transactions, credit card numbers with CVV (card verification value) and expiry date will suffice. Any merchant who gets hold of a card can easily copy down the credit card and CVV numbers. How can the banks check whether it was a case of fraud in such instances?

From Nov 1, cardholders will sleep well. Ironically, identity thieves will smell a bigger opportunity when people let their guard down.

Safeguarding credit card accounts should be a collective process involving banks, merchants and cardholders. A good policy would be one that makes all stakeholders responsible.

Perhaps for commercial reasons, banks do not want merchants to be responsible. But why should cardholders not bear, say, 10 per cent of the cost incurred when cards are stolen?

It would be similar to paying co-insurance for medical care.

Dr Harry Koh

This article was first published in The Straits Times.