Credit Cards: Fraud (Hansard, 29 March 1993)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield)
My Lords, the Government have no plans to take such steps. Credit card holders are not liable for fraudulent charges by traders.

§ Lord Molloy
My Lords, I thank the noble Baroness for that Answer. However, is she aware of the enormous problem that is being created, bearing in mind the fact that the credit card referral unit has itself initiated a number of arrests and nothing much has been done? Two thousands cards are either lost or stolen each day. Further, British people on holiday on the Continent have had to pay bills from places which they have never visited in their lives. Surely the Government could contact the card companies and instruct them to be a little more careful and to play the game with their reasonably honest customers who, although they may be foolish, are not dishonest?

§ Baroness Denton of Wakefield
My Lords, I must tell the noble Lord that I believe this to be an occasion on which we could have some sympathy with the banks. If a transaction has not been authorised by a card holder, the card issuer will reimburse the holder and charge the amount back to the merchant acquirer or retailer. It is important for individuals to retain transaction vouchers, to check their statements carefully and to inform the card issuer without delay.

§ Lord Williams of Elvel
My Lords, is the noble Baroness aware that there has been considerable comment recently in the press about credit card vouchers which are left open to car hire companies by holidaymakers? When the return comes in, people find that extra charges have been added. Is that a desirable practice, or is there any way in which one could prevent it?

§ Baroness Denton of Wakefield
My Lords, I am aware of the issue regarding car hire vouchers returned in such a way. It is something at which the Director General of Fair Trading is looking. There are already rules stating that charges in respect of vehicle damage, parking tickets and traffic violations cannot automatically be charged to the card holder's account.

§ Lord Clinton-Davis
My Lords, while operating within the letter of the law, is it not outrageous that credit card companies are now charging 20 per cent. 590 over the base rate on balances which are not cleared by the end of the month? Further, is it not even more outrageous that those companies are now considering ending the interest-free period, so that the interest is paid as soon as the item is bought and not from the time it appears on the statement? What do the Government propose to do about the matter?

§ Baroness Denton of Wakefield
My Lords, the Government will leave commercial contracts to the parties concerned. I should also point out that it is standard banking practice for interest to be paid on an amount borrowed from the time that it is borrowed.

§ Lord Molloy
My Lords, is the noble Baroness aware that the Consumers' Association is very interested and much perturbed by what is going on at present with credit card firms? The association believes that such firms should not just add on extras without proof of such extras being approved by the person who owns the card. It asks that there should be more responsibility taken before debiting accounts with extras. There is also the problem which arises when people telephone for an item and give their credit card number. They think that the amount to be charged is "x" amount, but when they come to pay for it they discover that the amount is very much more than that stated in the advertisement. Surely in the interests of honesty, the credit card companies and the bankers would be pleased if the Government were to take some initiative in the matter so as to get a better understanding for all concerned?

§ Baroness Denton of Wakefield
My Lords, I fully appreciate the noble Lord's concern. Credit card fraud and lost credit cards are a major problem. There is a responsibility on the card holder's part; for example, many cards are stolen from cars. That seems to me to be no place to leave one's credit card. Moreover, if a trader cannot substantiate a transaction, the card holder will be reimbursed. But leaving a credit card docket unsigned is no different from writing a blank cheque.

Lord Bruce of Donington
My Lords, at the risk of sounding a little old-fashioned, is there not a certain virtue in settling one's debts by cash?

§ Baroness Denton of Wakefield
My Lords, I suggest that there are many protections against using a credit card which are to the advantage of the consumer.

Earl Attlee
My Lords, what consideration have the Government given to obliging issuers of credit cards and bankers' cards to encapsulate a photograph of the card holder on the card?

§ Baroness Denton of Wakefield
My Lords, I am pleased to be able to assure the noble Earl that that matter, and several other technological protection matters, are being considered by the card issuers, who are the ones most at risk in many such transactions. Barclays Bank recently installed a system whereby an automatic check can be made to ascertain whether the proposed spend is in the pattern of the person spending. Unfortunately, I understand that it stops someone buying an engagement ring.

§ Lord Marlesford
My Lords, does my noble friend agree that in general there are no free lunches and that credit cards are often a snare and an illusion? Cautious people should be extremely careful about using them. It is foolish for people to have many credit cards just because they are often regarded as a status symbol.

§ Baroness Denton of Wakefield
My Lords, I agree with my noble friend that responsible borrowing is the only kind of borrowing that people should enter into.