SUBJECT: Banking, Criminal Law
 2 CLJ xii (Apr)
To most consumers, credit cards are pieces of plastic - issued to them by their bank or retail shop which allow payment for goods or services - which give them prestige and flexibility. Further, they also provide a convenient avenue of obtaining on-the-spot cash. The credit card is a phenomenally successful development of modern banking and retailing based on technological advancement and the increase in individual wealth and spending power. It is a significant forerunner towards and harbinger of a cashless society - argued by some to be an important indicia of an Utopian society. The credit card business is big business, to say the least. Thus we see in the media frequent and competitive credit card advertisements, intended to recruit the maximum number of customers and to encourage the maximum use of the easy credit facilities, that each of these friendly banks have to offer.
It was not always like this though. It was not too long ago when credit was seen as a bad thing, to which a negative stigma was attached. But over the last decade, the public’s perception has changed. Nowadays, credit is an acceptable part of modern day living and the stigma of the past has given way to social status and prestige. A credit card is a status symbol in today’s world. It is argued, whether rightly or wrongly, that credit is a good thing because it provides a boost to the economy by increasing consumer spending, and the credit card business has contributed greatly to the considerable expansion in the financial and related services.
Accordingly, there is a significant need to understand the law that relates to credit cards, both civil and criminal, especially, in the context of ever increasing credit card frauds, and the way in which the civil law has contributed to it, and the insufficient way in which the criminal law has sought to combat it. The aim of this short article is to attempt to provide such an understanding, albeit brief.
II The Effect Of Credit Gone Wrong
Perhaps, not unexpectedly, there is a serious downside to all these technological, economic and commercial developments. Bad debts, particularly those attributable to fraud, have escalated tremendously in recent years. Losses have been reported to run into many millions of dollars. Although the thrust of this article is to provide an understanding of credit card law in the context of fraud, and thus will survey the current legal position pertaining to credit card fraud in Singapore (and Malaysia), before turning to the fraud aspect, it is of interest to look first at the legal framework of the credit card business as this has some bearing on why the fraud perpetrators have been successful.
III The Underlying Contracts
There is an underlying contractual scheme which predates the individual contracts of sale of goods and services transacted on the card. According to the scheme, the supplier (or merchant) has agreed to accept the card in payment of the price of goods purchased. It follows that the cardholder-buyer is entitled to use the credit card to commit the credit card company to pay the suppliers.
This underlying scheme is established by two separate contracts:
1. The first is between the merchant and the credit card company (bank). The merchant agrees to accept payment by use of the card (and part with goods or services) from anyone presenting the card and the credit company agrees to pay the merchant the price of the goods or services supplied less a discount.
2. The second contract is between the credit card company (bank) and the cardholder. The cardholder is provided with a card which enables him to pay the price of goods or services rendered. In return, the cardholder agrees to pay the credit card company (bank) the full amount of the price of goods or services charged by the merchant....