A court in the United Arab Emirates has passed a landmark card-fraud judgment, laying the legal ground rules for the responsibilities of all involved parties, including card issuers, cardholders and merchants.
The party responsible for the error during the use of credit card would bear the responsibility for any resulting loss from fraud, the Dubai Court of Cassation announced in its Dec. 26 ruling. However, the cardholder is obliged to inform the bank when noticing a card has been lost or stolen. If he fails to do so, he will share some liability from any subsequent illegal purchases.
The ruling sets the governing legal principles to mediate between any disputes between cardholders, issuers and merchants over fraudulent use of credit cards, the court said.
The decision came in a case involving an undisclosed bank, which filed suit against an undisclosed cardholder seeking that he pay 4,500 dirham (US$1,225 or 937 euros) spent on purchases with his credit card at one retailer. The cardholder contends he did not sign for the purchases, so he bore no responsibility for any fraudulent sales made with his card.
Dubai’s First Court of Instance initially ruled in the bank’s favor, and an appellate court upheld the decision. The Court of Cassation, which decides which party is responsible for losses from card fraud, also found that the cardholder was entirely responsible for the purchases because the shopkeeper checked the card validity and verified the signature of the card’s owner with the specimen signature recorded on the card.
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