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Suspected ATM Fraud Cases

The Hong Kong Monetary Authority (HKMA) today (Tuesday) has issued a circular to all authorized institutions (AIs) in Hong Kong on suspected ATM frauds setting out its expectation on the precautionary measures that should be undertaken and the way in which customer complaints in this relation should be handled.

The HKMA announced on 29 September 2003 that there were a total of 29 cases of suspected ATM frauds involving HK$1.2 million reported in the past 12 months. Since then 4 more cases have been reported but only one of them is a new case. The other three relate to alleged unauthorised transactions that occurred more than 6 months ago. The total reported cases now amount to 33 involving HK$1.6 million, out of which 15 (45%) have been settled. "We have been liaising with AIs and the Police closely since the first suspected case came to our notice in July this year. We therefore believe that this represents a reasonably complete picture," Mr William Ryback, Deputy Chief Executive of the HKMA said. "Although the order of magnitude of the problem is not as serious as that reported overseas and AIs have been taking various precautionary measures, we think it is appropriate to issue some guidance on the best practices to be adopted by all AIs."

The precautionary measures recommended in the circular include upgrading the security safeguards of ATMs, installation of closed-circuit televisions (CCTVs), more frequent patrol of ATMs and enhanced customer education on the importance of protecting their cards and PINs. "The HKMA will monitor AIs' progress in implementing such measures," Mr Ryback said.

"In addition to these precautionary measures, we have asked AIs to put in place a mechanism whereby transactions conducted through counterfeit cards can be identified quickly." Mr Ryback said. "This will enable AIs to quickly determine whether or not a customer should be compensated." The Code of Banking Practice stipulates, among other things, that card issuers will bear the full loss incurred when transactions are made through the use of counterfeit cards.

"As regards existing unsettled cases, we expect AIs to deal with them quickly. AIs should conduct their internal investigations in a full and prompt manner in parallel with the Police investigations. Where there is sufficient evidence indicating that the customers' cases are substantiated, compensation should be made in accordance with the Code of Banking Practice as soon as possible without waiting for the Police's investigation report. In other cases, AIs should reply to the customers within one month after receiving the Police's reports," Mr Ryback said. "AIs should also give their customers the full reasons, if they decide that the customers' cases are not substantiated. We will ensure that customers' complaints are being dealt with fairly and reasonably."

Hong Kong Monetary Authority
14 October 2003

Last revision date: 1 August 2011
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