Liability caps for losses from unauthorised e-payments in Singapore set out in new guidance

The Monetary Authority of Singapore (MAS) has opened a consultation on draft new guidelines (34-page / 731KB PDF) which propose liability caps for both financial institutions and account holders in respect of unauthorised e-payments.

Under the plans, account holders whose recklessness is primarily responsible for losses they sustain will be liable for that loss up to any transaction limit or daily payment limit agreed with the account provider.

In cases where account holders have not acted recklessly but nevertheless have contributed to a loss, their liability will be capped at SIN$100 ($76), according to MAS' proposals.

In other circumstances, including where account providers or retailers have acted negligently, and where account holders have take "full care" of their accounts, the account holders will not be liable for any losses stemming from unauthorised e-payment transactions. This includes an obligation on the account holders to "protect access codes".

The draft new guidelines also set out a requirement on financial institutions (FIs) that provide e-payment accounts to issue "timely notifications" to consumer and micro business customers in respect of transactions made to or from their accounts.

Information to be included in the notifications, which the institutions must send by text message or email, include details enabling them to identify the account concerned, the recipient of payments, the amount of money being transferred, the transaction time, date and type, and the name of the business concerned, and where possible their merchant reference number, where the e-payment transaction concerns goods and services they have provided.

The institutions must also provide customers with a channel to report erroneous e-payment transactions, under the proposals.

"To enable the account holder to monitor all payment transactions made to and from his protected account and report unauthorised or mistaken payment transactions to the responsible FI in a timely way, we propose that responsible FIs provide the account holder with adequate transaction notifications and at least one convenient and free of charge reporting channel," MAS said.

"The account holder will be encouraged to take better care of his protected account if the transaction notifications are easy to read and access, and the reporting channel is user friendly. To this end, MAS has proposed guidelines to facilitate the standards on transaction notifications and reporting channels," it said.

The guidelines are open to consultation until 16 March.

Technology law expert Bryan Tan of Pinsent Masons MPillay, the Singapore joint venture partner of Pinsent Masons, the law firm behind Out-Law.com, said: "This is a long-awaited proposal from the consumer standpoint and can be seen as a boost to counter one of the frequently cited bugbears on the lack on adoption of e-payments in Singapore."