Banks must exhaust all avenues over credit card disputes bef

Banks must exhaust all avenues over credit card disputes before filing suit
BY SIM LEOI LEOI

PETALING JAYA: Banks should exhaust all avenues to settle disputes over credit card payment with their clients before filing any lawsuit.

Deputy Finance Minister Datuk Kong Cho Ha said banks could even use the facility offered by Bank Negara to negotiate with their clients over the disputed sum.

This is particularly true for those amounts disputed because they were fraudulent transactions run up on an account after the credit cards were stolen.

However, if after due diligence carried by the banks showed that these fraudulent transactions were really run up after the theft and a report was lodged, then banks should bear the responsibility, he said here yesterday.

Kong was responding to a claim by Consumers Association of Penang president Datuk S.M. Mohamed Idris that some banks were pursuing card-holders for the fraudulent transactions, despite these being run up after the cards were stolen.

[b]Mohamed Idris said although card-holders were required to pay up only RM250 under Clause 13.2 of Bank Negaras guidelines, many were unaware of such a rule.

Banks know about the clause but have chosen to ignore it, Mohamed Idris alleged, adding that these banks often fell back on the excuse that a provision in their credit card contracts stated that card-holders must be liable for all transactions carried out before they reported the theft.

Kong said many banks had put into place their own monitoring mechanism to track down fraudulent transactions and would often call up their clients for confirmation if the outlets or purchases looked suspicious.
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Some establishments have even engaged a third party to investigate claims of theft and fraudulent transactions, he said.

MCA Public Services and Complaints Department head Datuk Michael Chong said some banks were forcing their clients to pay up for such fraudulent charges, to the extent of filing lawsuits against them.

Sometimes, the disputed sum is very little, around RM2,000 to RM3,000. Most banks are very reasonable and will usually ask only for a minimal sum or for the clients to pay up by instalments for such fraudulent charges.

But some banks demand full, immediate payment he said.

Chong said he had received many complaints of such a nature and had even tried to mediate between the clients and their banks.

However, they (banks) even told off the clients for getting my help. Im gathering details of such banks and will not hesitate to publish their names because the public has the right to choose which establishment they should patronise, he said.

link:http://thestar.com.my/news/story.asp?file=/2009/2/1/nation/3172520&sec=nation

All Malaysians should be made aware of this clause .

The limit of your liability for a lost or stolen credit card is RM250.00 only under Rule 13.2 of the Bank Negara rules on credit card if it has been fraudulently used.

Please note this limit and ensure that your bank does not overcharge you should your card have been used illegally.

Most are unaware of RM250 limited liability PLEASE READ AND BE INFORMED! CARDHOLDERS need not pay more than RM250 whenever their lost or stolen credit cards are used by others. Yet, often times, they end up paying much more.

This is because Bank Negara has not informed cardholders that they do not have to pay more than RM250 for fraudulent transactions carried out using their lost or stolen cards, when they had not acted fraudulently and had informed the banks about the lost or stolen cards as soon as possible.

This protection is given under Clause 13.2 of Bank Negara’s Credit Card Guideline:

“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 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.”

Banks know about Clause 13.2 but have chosen to ignore it. Instead they pursue cardholders for the fraudulent transactions.

They will tell cardholders that a clause in the credit card contracts states that all transactions carried out before the loss of the cards are reported to the banks, are deemed to be carried out by the cardholders.

Many cardholders then pay up because they are unaware of the RM250 limited liability.

Quote from related forum

PETALING JAYA: With lending rates reduced and lower cost of funds, consumers are now rallying for credit card interest rates to be slashed to help them get out of debt.

Credit card interest is now pegged at 18% a year (1.5% a month) making it an uphill task for those with large outstanding balances to be debt-free.

If one can only afford to pay the minimum 5% repayment each month, it could take forever to repay as balances snowball under the high interest rate.

There are 10.3 million credit cardholders in the country with total debt standing at RM22.8bil as of Dec 2008.

The actual cost of funds have reduced greatly, to about 2% to 3%. If you consider that, banks are making enormous profits with the 18% credit card interest rate, said a businessman who wished to remain anonymous.

Deputy Finance Minister Datuk Kong Cho Ha concurred, saying that banks should lower the credit card interest rates, adding that there was a sizeable number of credit card holders, who form a large clientele for banks.

Kong said although Bank Negara fixed the rate at 18%, banks could lower the credit card interest rate on their own.

Recently, Bank Negara announced a 75 basis point cut in the indicative overnight policy rate or OPR to 2.5%.

Following this, banks reduced their base lending rates (BLR), which eased the burden on those servicing housing and mortgage loans.

The countrys largest bank, Maybank, has reduced its BLR to 5.95%, from 6.5%, with RHB Bank, Hong Leong Bank, CIMB and Bumiputera Commerce Holding Bhd also among other banks fixing a similar BLR.

Many feel it is about time that credit card interest rate be adjusted, given the challenging economic scenario.

Consumers Association of Penang (CAP) president S.M. Mohamed Idris called for the 20-day interest free period for credit cardholders making purchases to be reinstated, regardless of whether they paid their outstanding balances in full.

Those who cannot afford to make full payments can never get to enjoy the interest free period, he said, adding that such cardholders could end up with spiralling balances.

Mohamed Idris said the previous system of offering the 20-day interest free period helped to ease the financial burden on credit card debtors.

Association of Banks executive director Chuah Mei Lin said the body would consider the suggestions.

We have frequent dialogues with Bank Negara and this is something that we will bring up, she told The Star.

She explained that the credit card interest rate was actually intended to discourage people from spending beyond their means.

We want consumers to be prudent in their expenditure, she said, reiterating that credit card use was meant to be a short-term deferment payment for goods acquired.

Chuah said the credit card interest rate was fixed and not pegged to the BLR.

Credit card interest rates are different from loan interest rates, because they are not tied to the BLR. It also carries a different kind of risk compared to loans in that there is no cash flow or collateral, she said.

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