I REFER to last Tuesday's report, 'Credit card stolen? Mind the pitfalls', and am perturbed to hear that cardholders are held liable for transactions made on their lost or stolen cards before they report the missing cards to the banks.

A lost or stolen card is only one side of the equation. For a fraudulent transaction to take place, the fraudster needs the merchant to verify the signature on the charge slip, and accept payment in exchange for the goods.

Should the merchant not be held responsible as well since it has failed to fulfil this part of its responsibility? Similarly, is it not the responsibility of the bank to ensure that the merchant exercises its due diligence in verifying transactions?

To place the liability entirely on the cardholder is unfair and appears to contravene the spirit of the Consumer Protection (Fair Trading) Act.

Put simply, the idea of the merchant still making its sale and the bank still earning its commission from a fraudulent transaction at the expense of a victim (the cardholder) does not sound logical or fair.

Furthermore, my understanding is that a credit card transaction is built on the basis of a contract of sale. Since fraud is a crime, is it not right to say that a contract of sale and hence the credit card transaction that arises from it do not exist on the basis that they are illegal? If so, does a cardholder even have a case to answer?

Oh Kwong Wee

This article was first published in The Straits Times.