We all know that if we lose our credit card, we should report the loss to the credit card issuer immediately. Otherwise, we may be held liable for losses arising from unauthorised use of the credit card before the report. Normally, provided that the cardholder has taken reasonable care of the credit card and the PIN, and has reported the loss of credit card as soon as reasonably practicable, his/her maximum liability for such loss would be confined to a limit specified by the credit card issuer, which should not exceed HK$500. But do you know what you should do if you lose your Octopus card? My friend lost her wallet last weekend, losing both her credit card and Octopus card with the Automatic Add Value Service (AAVS) function. While she immediately reported the loss of her credit card to the credit card issuer, she did not report the loss of her Octopus Card to Octopus Cards Limited (OCL) because she couldn’t be bothered as there was only very little money left in her Octopus card. However, it did not take too long before she regretted this, as a week later, she discovered from her credit card statement that her Octopus card had been reloaded seven times. As a result, she lost HK$3,500. Let’s learn from my friend’s painful experience.
Automatic reloading with AAVS
My friend, like a lot of busy Hong Kong people, applied for Credit Card AAVS function from her credit card issuing bank. The AAVS function is convenient because when the remaining value in her Octopus card reaches zero or becomes negative, the OCL will automatically reload her Octopus card with HK$500 through the Octopus reader machines. The reloaded amount will be charged to her credit card account. The AAVS function is in effect a standing instruction authorising the credit card-issuing bank to pay the reloaded amount to OCL.
What if you report the loss of your Octopus card with AAVS function to OCL?
Noting the serious consequence that may result from the loss of an Octopus card with AAVS function, Octopus cardholders should report the loss of their Octopus card to OCL immediately by calling 24-hour Lost Octopus Reporting Hotline. But please note that OCL does not accept the reporting of loss of non-personalised Octopus cards without the AAVS function, since there is no cardholder information in such cards to enable OCL to verify whether the person reporting the loss of card is indeed the cardholder*. Once you have reported loss of your Octopus card with AAVS function, OCL will cancel the Octopus card and disable the AAVS function. This will limit your loss to the remaining value in your Octopus card plus one reload value (if any) within three hours after you successfully reported the loss to OCL.
You may wonder why you still need to bear the value reloaded (if any) to your card within three hours after you successfully reported the loss of your Octopus card. This is because Octopus is operated in an off-line mode, which is why the Octopus card readers operate so efficiently, and it takes time to send files separately to all front-line processors to stop the unauthorised use of the lost Octopus card. Incidentally, if the Octopus card you have lost is a bank-issued Octopus card (i.e. a co-brand card), you need to call the card-issuing bank (instead of OCL) to report loss immediately.
What will happen to the AAVS standing instruction if your lost credit card is replaced with a new one?
My friend thought that since she had reported loss of her credit card to the card-issuing bank and got a replacement card, the AAVS standing instruction would not be carried over to the new card and she therefore did not see the need to report loss of her Octopus card to OCL. She was wrong.
Most of the credit card issuing banks that provide AAVS function will, pursuant to the terms and conditions of the AAVS Agreement, automatically carry over the AAVS standing instruction to the new card when a customer reports loss of his/her credit card and requests for a replacement card, even though the new card has a new credit card number. When you think about it, if you only lose your credit card but not your Octopus card, you would most certainly like the AAVS standing instruction to be carried over to your new credit card, as this will save you time and effort in re-applying for the AAVS function. However, in case you have also lost your Octopus card with AAVS function, you should report loss to OCL immediately, your lost Octopus card will then be blocked and its AAVS function will be cancelled accordingly. Therefore, you should check the terms and conditions in the Octopus AAVS application form carefully to ascertain whether the bank will carry over the AAVS instruction to your new credit card, or you can check directly with the bank.
Remember to carry over the direct debit authorization (DDA) set up on the lost credit card to ensure you won’t miss any recurring payments
The credit card my friend lost also had autopay arrangements set up to pay her recurring fees, for example, mobile service fee, utility bill and insurance premium. Since her credit card- issuing bank helped her link the AAVS function to her new credit card, she thought that the bank would also help her carry over the DDAs to her new credit card. Again, she was wrong.
A credit card DDA is typically given directly to the merchant (and not the credit card-issuing bank) by the cardholder signing a form authorising the merchant to charge a designated credit card account for any billable charges payable to the merchant. Any amendment to the authorisation (for instance, a request for the transfer of the authorisation to a new credit card) therefore has to be made directly to the merchant. Your credit card-issuing bank cannot help you amend the authorisation that you have given to the merchant because the authorisation relates to your contract with the merchant, and your bank is not a party to it. It follows that if you want to cancel the DDA, you should inform the merchant. You should also keep a record of the cancellation arrangement in case there is any dispute in the future (for example, in case the merchant fails to effect your cancellation request in a timely manner).
Generally speaking, most of the credit card DDAs would no longer be effective when the credit card is replaced by a new card with a new card number. But I have seen some DDAs which also authorise the merchants to continue to charge their fees to any replacement credit card. You should read the terms of your DDAs carefully to ascertain the type of authorisation you have given to the merchant.
Luckily I reminded my friend to check the DDAs on her credit card. She found that some of her DDAs could not be continued on her new credit card. She therefore re-arranged the DDAs with respective merchants directly to ensure that she would not miss any recurring payments. So, remember if you lose your credit card, apart from reporting loss immediately to the credit card-issuing bank, please check whether your lost credit card has any DDAs attached to it and if so, please check with the relevant merchant(s) whether you need to arrange for another DDA for your new credit card. You can go through past credit card statements or ask your credit card-issuing bank to help identify all the regular payments you make through your credit card.
Read the terms carefully before you sign any agreement
My friend thanked me for my advice and said she was lucky to have a friend working in the HKMA who therefore knows about such matters. Again, she was wrong. All the above information is not secret and can be found in the terms of the Octopus AAVS application forms and the DDA forms. From now on, please be a smart consumer by reading and understanding the terms and conditions carefully before signing any agreement or contract in order to fully understand your rights and obligations.
Meena Datwani
Executive Director (Banking Conduct)
10 January 2012
* If the lost card is later found and returned to OCL, the cardholder may be able to claim back his/her card's remaining value and deposit (if applicable) if he/she can produce the proof, for example, the receipt of a recent transaction using the Octopus card since there is a card number on the receipt.
