Calaycay, Jasmine Charo: Current Issues Related to Republic Act No. 8484

Introduction

Recent advances in technology have helped us carry out our day-to-day activities even if we do not realize that they are around. These advancement or discoveries due to technology has made our life convenient. They take care of these tedious and boring details so that we can concentrate on the more creative and fun aspects of human activity.

One of the most important advancement in technology is the discovery and the widespread use of access device in commercial transactions. The growth of credit card usage in the Philippines and other countries has very much expanded so possibilities of fraud have become numerous. Since many people use these access devices many problems crop up due to fraud.

To prevent fraud, the State should protect the rights and define the liabilities of parties in commercial transactions by regulating the issuance and use of access devices. These are embodied in Republic Act No. 8484 or the “Access Devices Regulation Act of 1998.” The bill introduced by Senator Manny Villar known as the “Credit Card Fraud Act” seeks to deter the commission of credit card fraud and to protect the banking and financial institutions by providing remedies for problems arising from the commission of such fraudulent acts.

Statement of the Problem

Credit card, an example of access device, is an important device that allows a holder to have commercial transactions without using cash or carrying much cash.

While it is true that the use of a credit card or access device is very convenient, it can also lead you to financial worries or problems, when we lack control of our spending. The best thing to do is to control your credit limit. If you are an impulse buyer, a lower credit limit is better because there is a built-in spending check.

In line with the use of access device, numerous problems occur. There is an increasing occurrence of credit card fraud. Banks or credit card companies involved incur so much loss, resulting in lesser sales of credit cards and ultimately threatening the survival of the credit card industry and would also affect the domestic economy. This credit card fraud in effect is a form of economic sabotage as it creates bad image for the country in the global market as it affects our tourism industry.

In our country, credit card fraud is prevalent. One fraudulent transaction may amount to millions of pesos where the credit card company absorbs the loss. Credit card is also rampant in other countries like in the United States of America where merchants lost millions of dollars. Credit card fraud is also a significant problem in Canada, where fraudsters use lost, stolen or counterfeit cards.

Regulation of Access Devices in the Philippines

Due to the advancement of technology and the widespread use of access devices in commercial transactions, the Republic Act No. 8484 was enacted to protect the rights and define the liabilities of parties in such commercial transactions by regulating the issuance and use of access devices.

Access device means any card plate, code, account number, electronic serial number, personal identification number, or other telecommunications service, equipment, or instrumental identifier, or other means of account access that can be used to obtain money, good, services, or any other thing of value or to initiate a transfer of funds (other than a transfer originated solely by paper instrument). [1] The most common access device is the credit card. Credit card means any card, plate, coupon book, or other credit device existing for the purpose of obtaining money, goods, property, labor or services or any thing of value on credit. [2]

Under Section 9 of the RA 8484, the following acts shall constitute access device fraud and are declared to be unlawful:

(a) producing, using, trafficking in one or more counterfeit access devices;

(b) trafficking in one or more unauthorized access devices or access devices fraudulently applied for;

(c) using, with intent to defraud, an unauthorized access device;

(d) using an access device fraudulently applied for;

(e) possessing one or more counterfeit access devices or access devices fraudulently applied for;

(f)producing, trafficking in, having control or custody of, or possessing device-making or altering equipment without being in the business or employment, which lawfully deals with the manufacture, issuance, or distribution of such equipment;

(g) inducing, enticing, permitting or in any manner allowing another, for consideration or otherwise to produce, use, traffic in counterfeit access devices, unauthorized access devices or access devices fraudulently applied for;

(h) multiple imprinting on more than one transaction record, sales slip or similar document, thereby making it appear that the device holder has entered into a transaction other than those which said device holder had lawfully contracted for, or submitting, without being an affiliated merchant, an order to collect from the issuer of the access device, such extra sales slip through an affiliated merchant who connives therewith, or, under false pretenses of being an affiliated merchant, present for collection such sales slips, and similar documents;

(i) disclosing any information imprinted on the access device, such as, but not limited to, the account number or name or address of the device holder, without the latter’s authority or permission;

(j) obtaining money or anything of value through the use of an access device, with intent to defraud or with intent to gain and fleeing thereafter;

(k) having in one’s possession, without authority from the owner of the access device or the access device company, an access device, or any material, such as slips, carbon paper, or any other medium, on which the access device is written, printed, embossed, or otherwise indicated;

(l) writing or causing to be written on sales slips, approval numbers from the issuer of the access device of the fact of approval, where in fact no such approval was given, or where, if given, what is written is deliberately different from the approval actually given;

(m) making any alteration, without the access device holder’s authority, of any amount or other information written on the sales slip;

(n) effecting transaction, with one or more access devices issued to another person or persons, to receive payment or any other thing of value;

(o) without the authorization of the issuer of the access device, soliciting a person for the purpose of:

1) offering an access device; or
2) selling information regarding or an application to obtain an access device; or

(p) without the authorization of the credit card system member or its agent, causing or arranging for another person to present to the member or its agent, for payment, one or more evidence or records of transactions made by credit card. [3]

Under Section 14 of RA 8484, there is a prima facie evidence of intent to defraud by the mere possession, control or custody of:

(a) an access device, without permission of the owner or without any lawful authority;

(b) a counterfeit access device;

(c) access device fraudulently applied for;

(d) any device-making or altering equipment by any person whose business or employment does not lawfully deal with the manufacture, issuance, or distribution of access device;

(e) an access device or medium on which an access device is written, not in the ordinary course of the possessor’s trade or business; or

(f) a genuine access device, not in the name of the possessor, or not in the ordinary course of the possessor’s trade or business, shall be prima facie evidence that such device or equipment is intended to be used to defraud.[4]

With the use of new techniques and improved technology, the methods and types of fraud are increasing. The most common methods include copying or cloning of credit cards, ATM fraud, internet fraud, and PIN stealing. These methods are commonly used to steal money. The most prevalent fraud committed among these access devices is the credit card fraud. Though it is impossible to totally eliminate credit card fraud, there are a lot of things we can do to reduce our exposure to this kind of fraud.

Suggestions or Recommendations

The criminal use of credit card or access device is costing businesses millions of pesos each year, so credit card fraud prevention is very necessary. Credit card fraud is a crime that can often be prevented. Prevention of credit card fraud should start with the holder or consumer as per Section 15 of RA No.8484, in case of loss of an access device; the credit card holder must notify the issuer of the access device of the details and circumstances of such loss upon knowledge of the loss. Full compliance with such procedure would absolve the access device holder of any financial liability from fraudulent use of the access device from the time the loss or theft is reported to the issuer. [5]

The card holder shall at all times keep the Personal Identification Number (PIN) confidential and shall not disclose it to any person or compromise its confidentiality.

There are some strategies to protect your credit card.

Do:

  • Sign your cards as soon as they arrive.
  • Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.
  • Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.
  • Keep an eye on your card during the transaction, and get it back as quickly as possible.
  • Void incorrect receipts.
  • Destroy carbons.
  • Save receipts to compare with billing statements.
  • Open bills promptly and reconcile accounts monthly, just as you would your checking account.
  • Report any questionable charges promptly and in writing to the card issuer.
  • Notify card companies in advance of a change in address.

Don’t:

  • Lend your card(s) to anyone.
  • Leave cards or receipts lying around.
  • Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.
  • Write your account number on a postcard or the outside of an envelope.
  • Give out your account number over the phone unless you’re making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.[6]

There are also steps to prevent credit card fraud for businesses.

Credit card fraud prevention when dealing with credit card customers face-to face.

When dealing with credit card customers face-to face, the business enterprise should ask and check other photo ID’s to find out if the ID has been altered by the person trying to use a stolen credit card. Compare signatures on the credit card and credit card slips on any other ID presented. Check the security features of the credit card. Check the presented card with recent lists of stolen and invalid credit cards. Call for authorization of the credit card. Destroy all carbon copies of the credit transactions to ensure that no one can steal the credit card information.[7]

Credit card fraud prevention when dealing with Credit card customers over the phone or through the internet.

If the information is not complete, don’t process credit card orders. Don’t process credit card orders that originate from free e-mail addresses or from e-mail forwarding addresses. In such a case, ask the customer for an ISP or domain-based e-mail address that can be traced back. If the shipping address and the billing address on the order are different, call the customer to confirm the order. You may even want to make it a policy to ship only to the billing address on the credit card. [8]

Small businesses are common preys of credit card fraudsters. One way businesses can help prevent credit card fraud is by ensuring that all their staff are aware of the suspicious behaviors that may indicate someone is about to try paying for a purchase with a counterfeit or stolen credit card. They should be wary of credit card customers who are nervous and edgy and who pulls a credit card out of a pocket rather than a wallet, purchases an unusual amount of expensive items, tries to hurry you up near closing time and distracts attention during check-out.
Businesses should be aware of the most common scams and how to avoid them. As the best defense against scams is awareness and vigilance.

The credit card company who is the victim of credit card fraud and oftentimes absorbs the loss should spend more money in prosecuting alone even without the active participation of the government agencies.

Conclusion

Reduction of credit card fraud should begin with the user or credit card holder. He should follow safeguards in the use of credit cards and report loss to the credit card company as soon as possible or upon knowledge of the loss in order to be absolve of any financial liability in case of fraudulent use of such credit card.

Credit card fraud cannot be prevented entirely but by establishing and following procedures constantly, credit card fraud losses can be cut down or reduced.

There is a need for additional safeguards because of the inadequate security features of credit cards in the country. Banks or credit card companies should comply with the requirements to safeguard customer information, prevention of money laundering and terrorist financing, reduction of fraud and theft of sensitive customer information.

Executive Order No. 573 creating an Anti-Fraud Task Force composed of the National Bureau of Investigation and the Philippine National Police would strengthen Republic Act No. 8484 or the “Access Devices Regulation Act of 1998.

The best defense against fraud and scams is awareness and vigilance. With proper prevention policies in place, businesses can reduce their credit card fraud losses.

Give more teeth to the laws against fraudsters using illegally obtained cards or information from credit cards. The Bill introduced by Senator Manny Villar known as the “Credit Card Fraud Act” when enacted into law could supplement Republic Act No. 8484.


Endnotes

[1] Section 3 (a), Republic Act No. 8484 or the “Access Devices Regulation Act of 1998”

[2] Section 3 (f), Republic Act No. 8484 or the “Access Devices Regulation Act of 1998”

[3] Section 9, Republic Act No. 8484 or the “Access Devices Regulation Act of 1998”

[4] Section 14, Republic Act No. 8484 or the “Access Devices Regulation Act of 1998”

[5] Section 15, Republic Act No. 8484 or the “Access Devices Regulation Act of 1998”

[6] http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre07.shtm

[7] Ward, Susan. “Credit Card Fraud” http://sbinfocanada.about.com/od/insurancelegalissues/a/creditcardfraud.htm

[8] Ward, Susan. “Credit Card Fraud” http://sbinfocanada.about.com/od/insurancelegalissues/a/creditcardfraud.htm

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