Oct.06.2005

Japanese Bankers Association

JBA Releases Amendments to "Model Terms and Conditions on Cash Cards"

JBA ratified amendment to the "Model Terms and Conditions on Cash Cards," and the "Agreement on Protection of Depositors concerning Counterfeit/Stolen Cash Cards" and "Agreement on Countermeasures on Illicit Withdrawals of Deposits" at the Board of Directors Meeting held on September 20 and October 5. These were released on October 6. The following is an overview of the amendments and agreements.


I.

Amendments to "Model Terms and Conditions on Cash Cards"
The amendments were made to follow up on the recent enactment of the "Law concerning the Protection of Depositors from Illicit Deposit Withdrawals Using Counterfeit/Stolen Cash Cards through ATMs." The following are the two main points.
(i) Deposit withdrawals using counterfeit cash cards are invalid unless they are a result of an intentional act or gross negligence of customers.
(ii) Deposit withdrawals using stolen cash cards are in principle compensated for based on certain terms. These terms include; (a) The customer immediately notified the bank when he/she became aware that the card had been stolen, (b) The customer fully cooperated with the bank's inquiries, and (c) The customer filed a damage report with the police. If there is negligence on the part of the customer, compensation for three-fourths of the damages is provided. No compensation will be provided when gross negligence was recognized on the part of the customer.

II.

Agreement on Protection of Depositors concerning Counterfeit/Stolen Cash Cards
To promote depositor protection as set forth in the Law and ensure customer confidence in deposits, the Board of Directors agreed on what banks have to do at the moment, including clearly differentiating to customers cases that could be recognized as gross negligence and those that could be recognized as negligence. These cases are illustrated in the separate table. The discussion in the Diet calling for banks to advise customers individually, specifically and repeatedly to change their PINs in advance in order to include use of an easily deducible PIN in the category of negligence, is reflected in the table.


[Cases that could be cardholder's gross negligence or negligence]
1. Cases that could be cardholder's gross negligence
When a cardholder's negligence is tantamount to an intentional act. Typical cases are:
(1) When a cardholder informed a third party of his/her PIN
(2) When a cardholder wrote his/her PIN on his/her card
(3) When a cardholder handed his/her card to a third party
(4) Other similarly negligent acts on the part of a cardholder
(Note: Cases in which a cardholder who is ill personally handed his/her card along with PIN to the nursing helper (nursing helpers are barred from handling patients' cash cards under their care) and similar cases are exceptions to the above.)
2. Cases that could be cardholder's negligence
(1) The following two cases could be regarded as negligence by the cardholder:
(i) Despite a bank repeatedly giving an individual, specific and repeated advice to change his/her PIN from easily deducible numbers such as a birthday to other numbers, customers kept using a PIN made from his/her birthday, home address, home or work telephone number and car license plate numbers and stored their cards together with documents that may be used to deduce the PIN (driver's license, health insurance certificate, passport, etc.).
(ii) Customers have written their PIN on a memo in a way that third parties can easily recognize it and store it with their cash card.
(2) In addition to the above, cardholder negligence could be recognized when either (a) or (b) in the following (i) combined with either (a) or (b) in the following (ii) and damage is caused.
(i) PIN management
(a) Despite a bank repeatedly giving an individual, specific and repeated advice to change his/her PIN from easily deducible numbers such as a birthday to other numbers, customers kept using a PIN made from his/her birthday, home address, home or work telephone number and car license plate numbers
(b) Customers have used their PIN for purposes other than banking transactions such as lockers, safety deposit boxes and mobile phones.
(ii) Cash card management
(a) Customers left their cash cards in places easily spotted by third parties such as the inside of a car, making them vulnerable to theft.
(b) Customers are not appropriately wary due to intoxication or such, making them vulnerable to pickpockets.
(3) Other similarly negligent cases on the part of cardholders

III.

Agreement on Countermeasures on Illicit Withdrawals of Deposits
Following up on the enactment of the "Law concerning the Protection of Depositors from Illicit Deposit Withdrawals Using Counterfeit/Stolen Cash Cards through ATMs," particularly on discussions of and the incidental resolution for the Law at the Diet, the Board of Directors reconfirmed the existing agreement and additionally agreed to reinforce countermeasures against crimes including illicit deposit withdrawals using stolen passbooks. "Countermeasures against crimes related to Internet banking" were newly added to the agreement as follows.
- Banks will endeavor to gather information on the latest crimes involving Internet banking and implement appropriate technological countermeasures against them. At the same time, banks will endeavor to heighten customer awareness of these crimes.
- In the event of damages, banks will sincerely cooperate with customers and disclose information actively to prevent the spread of crimes, aiming to enhance the reliability of Internet banking.