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Credit and Debit Cards and on-line Security

Consumers are said to be reluctant to do business on-line, because they fear that their card number will be 'stolen' in the process. The argument then continues that legislation is required to establish a system of digital signatures so that consumers will be protected. The proposals for legislation have suggested what are called 'rebuttable presumptions' that if your digital signature is used, you signed it. These proposals tend to be supported by banks.

At first blush one might feel grateful to the banks for their concern for the consumer. At second, this seems unusually caring from the banks part. In practice, this is an incorrect understanding of what is going on.

With a credit card (as opposed to the debit card), and in general, if somebody else uses your card wrongly then, given certain conditions, your bank must recredit your account with the amount wrongly taken. In other words, if your credit card number is stolen, the bank, or store, pay up. Some cards impose a fifty pound limit which you may have to pay up first. This is not the case with debit cards. With a debit card if somebody else steals and misuses your card number, you remain liable for the debit incurred.

The difference is precisely that, in effect, there is a 'rebuttable presumption' that the user of the debit card number is the owner of the card, but by statute, the Consumer Credit Act, such a presumption does not apply for credit card transactions. Please do note this is a very much simplified version of the law.

A debit card is _not_ a credit card within the consumer credit Act, since there is no necessary creation of a debt.

Once you understand this, you understand also why debit cards are so popular with banks, and in turn, that banks, when promoting digital signatures, are attempting to take the opportunity to impose liability on the consumer. Recognise also that whenever a store loses out in this way, the cost is eventually passed on to the consumer.

In practice a credit card purchase on-line will be through a secure server. No such server is absolutely secure, but they are usually rather more secure than arrangements we each accept daily for the use of our credit card. There seems to be no evidence of wide spread fraud or misuse of credit card numbers on line. It appears therefore at the moment, to be no particular desperate need so far as consumers are concerned for digital signatures to protect them against the misuse of their credit card numbers through interception on line

Please not however, first, that fraud does occur , and that actually getting your money back from the credit card company is no easy task.

Under the Distance Selling Directive, provisions now also have to be made for the protection of card numbers.

Please note also that Visa Debit Card holders have the benefit of contractual provisions which give a higher standard of protection.

Important: Please note that our law-bytes are retained for archival purposes only. The law changes, and these notes are often, now, out of date. You must take direct advice on your own personal situation and the law as it currently stands.
All information on this site is in general and summary form only. The content of any page on this site may be out of date and or incomplete, and you should not not rely directly upon it. Take direct professional legal advice which reflects your own particular situation.
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18 October 2013 http://www.swarb.co.uk/lawb/ecoDebCredSigs.shtml 70 18 October 2013