When firms sell prepaid items or packages and then go bust before they are delivered, the people who bought them can find themselves paying bank instalments long after the shutters are down.
The Consumers Association of Singapore (Case) plans to help them and has urged credit providers to be as liable as retailers if credit card purchases go wrong.
The consumer watchdog met the Association of Banks in Singapore (ABS) last month to appeal to its 150-plus members - including giants like Citibank and DBS Bank - to compensate consumers in three scenarios: when a company goes bust after collecting pre- payments, when an item bought is defective, and if an item is simply not delivered.
Case executive director Seah Seng Choon said banks can work with insurance companies to do this, adding: "Banks have contracts with merchants to provide credit card services.
They should make sure their partners are financially viable and play a part in enhancing confidence in the transactions market."
In Britain, the Consumer Credit Act holds the card firm jointly liable with the retailer for undelivered or faulty goods, as well as when firms fold.
Consumers can claim a refund from a card firm if they are unable to get it from the retailer.
It covers goods costing £100 to £30,000 (S$60,400), even if bought overseas or online.
Banks here are not required by law to give refunds for credit card purchases that go awry, as administrative manager Cecilia Khoo, 45, found out last year.
She bought prepaid photography and spa packages only to see both firms fold, leaving her more than $2,000 out of pocket. The credit card bills kept coming.
"I felt so cheated," she said.
"Can you imagine continuing to pay the bank even when you know you are never going to get what you are paying for?"
But Mr Abuthahir Abdul Gafoor, executive director of accounting firm Stone Forest Corporate Advisory, said Case's idea would be "difficult to implement and open to abuse", adding: "Credit card companies merely facilitate transactions.
To ask them to guarantee goods are delivered as promised does not make business sense.
ABS director Ong-Ang Ai Boon added: "It would be inappropriate to hold banks responsible for deficiencies in the delivery of goods and services."
This article was first published on May 6, 2015.
Get a copy of The Straits Times or go to straitstimes.com for more stories.