liability laws

THE only way to stop people from being conned into making payments with their credit cards is to have connected lender liability laws.

This law will stop card companies from making payments to illegal companies, said International Association for Consumer Law deputy president Datuk Dr Sothi Rachagan.

Sothi said such laws exist in Europe where Article 11(2) of the European Union Consumer Credit Directive provides for this. In Britain, the connected lender regime was introduced by the Consumer Credit Act 1974.

Connected lender liability means that the credit card company has to ensure that a merchant or service provider which accepts a credit card payment is operating within the law and is one that gives the credit card holder a fair deal.

"A debtor (credit card holder) has recourse against a creditor (credit card company) which provides the finance for the purchase of goods and services from a third party supplier for any misrepresentation made to the debtor and for any breach of the supply agreement," Sothi said.
"The financier is jointly and severally liable with the supplier. Connected lender liability is a useful consumer protection measure, especially when the supplier proves to be recalcitrant, untraceable, or insolvent."

Sothy said the Payment Systems Act 2003, which governs the issue of credit cards in Malaysia, does not provide for connected lender liability, adding that it was time this was looked into.