More discipline required from UAE retailers in verifying signatures
Among the various evidence which went in favour of Basel in his lawsuit against a national bank, which was claiming the money on unauthorised transactions made on his stolen card, was the mismatch of signatures on the payment slips and that on his credit card.
Basel's wallet was pick-pocketed at Abu Dhabi's Marina Mall in March 2009. Before he notified the bank of the theft, his stolen card was used in three different retail stores on purchases worth Dh4200. When his case moved from the arbitration panel to the court, the judge hired an accounting expert to examine the case file and bank documents, among which were the payment slips, recalls Basel, 29, an Abu Dhabi based management and information systems professional. Basel did not want to give his full name.
Finally, after seven long months, on May 31, 2010, he won the case. Basel, who represented himself in court, is yet to be reimbursed, and is waiting for the bank to act.
"To me it was a matter of principle. It was not about the Dh4000 — I could have paid it and spared myself several leaves, and time spent in the court," he told Gulf News.
Basel is not alone in saying that on several occasions staff at the payment counters of retail stores do a cursory job of comparing signatures. No one checked her identity card or cared to verify the signatures when homemaker Mamata Bandyopadhyay bought furniture and a large screen television totalling Dh10,000 from two well-known retail stores in Dubai and Sharjah respectively.
Though signatures are relatively ease to forge, Basel, Mamata and experts say it's time the retailers start doing a better job of verifying that would help reduce unauthorised transactions on stolen or lost cards. In fact Basel's case showed that the retailers did not carry out their responsibility.
Accepting what goes on is part of the problem, says an expert and that has to change.
"As long as the current culture persists, where the cardholder remains liable for everything, the banks will continue to let the money drain out of the accounts without too more consideration as to whose pockets it is ending up in," says Andrew Rochford, business consultant for ACI Wordlwide (EMEA), a global provider of electronic payments solutions for the world's top financial institutions, retailers and payment processors.
"In addition, as long as the retailers know they are going to get their money, they will also tend not to pay as much attention to detail as they should," he says.
Are the merchants legally liable when it comes to stolen or lost credit cards?
Merchants not off the hook
Credit cards can often be problematic, especially if someone loses their credit card in the UAE, feels Nasser Al Osaibi, partner at Global Advocates law firm. But legally the retailer or the store is not off the hook in terms of the liability burden, he says.
"If one loses his or her credit card in the UAE, one has a duty to report the lost credit card to the bank in the UAE or he or she runs the risk of incurring the liability of any charges which she or he did not make to such credit card.
"On the other hand, the [retail] merchant has a duty and is obliged to make sure that the signature on the slip matches the signature on the card. The merchant is liable for breaching this duty in the UAE," Al Osaibi adds.
Rochford says it's time retailers are made liable in practice for signature checking, but it is easier said than done. Implementation would require a lot of staff to be trained, and retail is a high staff turnover industry, he says.
He points to other issues such as: How close is close when checking a signed receipt against the card signature? Two, it takes a lot of courage to challenge someone who is in front of you with a basket full of expensive goods and basically accuse them of being a criminal and deny the shop-owner the profits from the sale.
J. P. Nambiar, head of retail at Jumbo Electronics, agrees, saying that one has to view this issue from the customer's perspective.
"A lot of consumer are sensitive to the issue of doubting or suspecting them of their card. So we have to tread this path very carefully," he says. But he adds that it is essentially a matter of discipline, and fundamentally cashiers have to be trained that signatures need to be checked and rechecked. As an alternative measure Jumbo, he says, takes a customer's signature on the invoice copy. "Tomorrow, God forbid, if there is mismatch of a signature and the particular card turned out to be a fraud, we go back and trace it on the invoice and check whether the signature matched with the one on the card."
So although verifying carefully is a good idea in theory, the implementation is a lot harder, says Rochford.
To counter this, he says, it could be argued that the very fact that retail staff are more vigilant in checking might be a deterrent in itself to many thieves. Or may be they'll get a bit clever at forging signatures. "Fraudsters have a tendency to adapt to the times, they rarely give up and go away," he adds.
Rochford has additional suggestions to make the liability a shared exercise.
One, hasten the introduction of chip and PIN technology for local cards. As banking regulations currently stand in UK and many countries, a merchant is liable if they have a chipcard reader and they accept a chip card without using the reader, that is, rely on the signature.
Two, impose a liability cap on fraudulent purchases. For example, the banks could levy an excess of say Dh500 on the cardholder if their card is stolen and used subsequently, and absorb the rest of the cost. This is the case in the US, and UK, although in the UK the banks rarely impose the charge.
Three, encourage customers to challenge via all legal processes. One issue relating to claims is the fact that it invariably costs the banks more money to defend a case than either the cost to the customer or the sum in dispute. They lose more by defending a Dh20,000 claim than paying out on it.
I think that the reason the banks are defending claims so rigorously now is the fact that the number of cases that go to court is quite low and they fear of the floodgates opening if they are perceived to be more relaxed. More cases going to court might get the banks to change their practices.
Because of the cost of defending claims, UK and US banks tend to write-off low value claims. Their attitude is influenced by several factors such as the practical evaluation of costs/benefits; the belief that not all of their customers are out to cheat them; and the knowledge that, for them at least, good customer relations means good business.
Last, encourage customers to publicise issues with banks—name and shame. This practice is far more wide-spread in Europe and US, Rochford adds.
Cardmember protection is not guaranteed
MasterCard Zero Liability Zero Liability Protection for Lost & Stolen Cards: Really?
According to MasterCard, the bank that issued one of its cards in the UAE should not hold a customer responsible for "unauthorised purchases," as long as the terms and conditions of its policy are met. But then MasterCard went on to warn that disputes with customers are decided by the financial institution on a "case by case basis".
Zero liability, their policy says, applies to purchases made in the store, over the telephone or made online.
As a MasterCard cardholder you will not be responsible in the event of unauthorised purchases provided that the following preconditions are met:
Zero liability does not apply to MasterCard cards if
If any of the conditions set forth above are not met, then your liability may not be zero but it may be limited by your issuing financial institution or federal or local law. Again, check with your issuing financial institution.
But when asked about the local and multinational putting in their condition of holding the card member liable, spokesperson of MasterCard replied in an email: "The MasterCard Zero Liability rule applies if the cardholder has taken reasonable and responsible steps to notify their card issuing bank and to provide pertinent information about the loss, theft, or possible unauthorised use of their MasterCard card. The final decision on liability is made by the card issuing bank on a case-by-case basis, based on the findings of their investigation."
Andrew Rochford, business solutions consultant for ACI Worldwide (EMEA), a global provider of electronic payments solutions for the world's top financial institutions, retailers and payment processors, is not too surprised by the response from MasterCard.
"I think the response from MasterCard sums up the situation perfectly," he says.
MasterCard has a zero liability policy, which, for the Middle East, is a policy only — issuing banks are not bound by it, he says.
Classic escape clause
"Whether the policy works or not is of no concern to them, it is there and they can hide behind it. The policy includes exclusions, for example ATM and non-PIN based transactions, and contains a classic escape clause: ‘You [the cardholder] will not be responsible in the event of unauthorised purchases provided that ... you have exercised reasonable care in safeguarding your card from any unauthorised use," Rochford adds.
"‘Reasonable care' could be interpreted as making sure your card never gets stolen, which is what the issuing banks seem to claim. Note that there is no mention of a condition that the card must be reported stolen before zero liability takes effect," he says.
Below are questions that readers might wish to ask their banks:
"Make sure that the responses are written on bank paper and come from a high enough authority within the bank, says Andrew Rochford, business solutions consultant for ACI Worldwide (EMEA), a global provider of electronic payments solutions for the world's top financial institutions, retailers and payment processors.
Maybe if enough people start asking the questions, the banks might eventually be forced to change, Rochford adds.
Technology upgrade:
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