More consumer protection for third-party e-payment errors

Singapore

CONSUMERS hit with unauthorised e-payment deductions via online or mobile banking will be assured of getting up to S$1,000 back when the errors are caused by the financial institution or third parties such as retailers.

This revised guideline came after financial institutions flagged concerns that the initial proposed guideline would be onerous. The set of proposed guidelines were made public earlier this year, with the finalised guidelines now set to take effect from Jan 31, 2019.

As it is, the final guidelines put out on Friday continue to assure that account holders would not be liable for any loss if it is caused by the financial institution, and not due to reckless behaviour by the users.

But in February, the Monetary Authority of Singapore (MAS) had proposed that consumers found to be careless but not reckless in contributing to unauthorised transactions in dispute will be liable for up to S$100. Such account users may have misplaced a mobile phone or have accidentally given away passwords. MAS further proposed that if banks can prove that reckless behaviour by customers led to the unauthorised transactions, consumers would then be liable for the actual loss.

But financial institutions said it was not reasonable to place the burden of proving the account user's recklessness on them. Responding as part of the public consultation, they told MAS that there were "challenges" in proving that the account users were reckless.

Another concern raised by many respondents was that the S$100 liability cap "does not serve to contain moral hazard by the account user, and is disproportionate to the potentially large losses that the responsible financial institution is exposed to", showed the summary of feedback received on the proposed guidelines.

As a result, MAS did away with the S$100 cap, and revised the guideline such that responsible users hit with an unauthorised e-payment transaction of no more than S$1,000 can claim that back from the bank if third parties had caused the errors. This threshold was set as banks typically require more checks for transactions that are more than S$1,000.

To be clear, these guidelines will not apply to scams as those cases will be investigated for fraud. Also, they will not apply to unauthorised payments made directly on credit cards, debit cards, and charge cards, since there are existing guidelines in place for these payments. But MAS cautioned that current standards of user protection for holders of credit cards, charge cards and debit cards can be improved.