New regulations issued! If your bank card is stolen, you can get compensation by doing this.

Compiled from: Supreme People's Court, Xiaoshan Court, China Fund News.
 
On May 25, 2021, the Supreme People's Court issued the "Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Civil Disputes over Bank Cards" (hereinafter referred to as the "Bank Card Provisions"), consisting of 16 articles, mainly regulating civil disputes arising from the conclusion of bank card contracts and the use of bank cards between cardholders and issuing banks, non-bank payment institutions, acquiring banks, special merchants, and other parties. Among them, the provisions on liability for unauthorized bank card transactions have attracted significant attention.

 

 
Case review
In the early morning of March 29, 2020, Xiaokang, a resident of Hangzhou, suddenly received multiple transaction alert text messages, showing that his debit card had five consecutive withdrawals and consumption records in Dubai, the United States, and other places, totaling 102,128.31 yuan. At that time, Xiaokang was at home, and the debit card was in his wallet.
 
Xiaokang, highly aware of his rights, reported the case to the police that same day. While reporting, he also took a textbook-like action: he went to the bank counter with his debit card, deposited 100 yuan, printed and kept the receipt for this transaction, to prove that both he and the card were in China, and the five early morning transactions were unauthorized.
 
Afterwards, Xiaokang contacted the issuing bank to request compensation, but the bank refused to pay, leading both parties to court.
 
The court held that multiple overseas transactions were made on the debit card held by Xiaokang, while on the same day, Xiaokang deposited 100 yuan into the card domestically. This confirmed that Xiaokang was in China and in possession of the card at the time of the overseas transactions, which were not conducted by Xiaokang.
 
At the same time, there was no evidence in the case that Xiaokang had disclosed the transaction password. Therefore, it was determined that the unauthorized use of the debit card was caused by others exploiting security vulnerabilities of the financial institution, and Xiaokang had the right to demand that the bank bear corresponding compensation liability.
 
 
"Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Civil Disputes over Bank Cards"
Article 6  
The people's court shall comprehensively review the evidence submitted by the parties, taking into account factors such as the distance between the location of the card transaction and the location of the genuine card, whether the cardholder conducted a basic transaction, the transaction time and time of reporting to the police, the cardholder's usage habits, the number and frequency of unauthorized card use, and the security of the transaction system, technology, and equipment, to comprehensively determine whether a counterfeit card transaction or online transaction has occurred.
 
[2] Article 7  
In the event of a counterfeit card transaction or online transaction, if the debit card holder requests the issuing bank to pay the principal and interest of the stolen deposit and compensate for losses based on the debit card contract legal relationship, the people's court shall support such a request in accordance with the law.
 
If a counterfeit card or online transaction fraud occurs, and the credit card holder requests the issuing bank to refund the overdraft principal, interest, liquidated damages, and compensate for losses based on the credit card contract legal relationship, the people's court shall support such a request; if the issuing bank requests the credit card holder to repay the overdraft principal, interest, liquidated damages, etc., the people's court shall not support it.
 
In the circumstances of the preceding two paragraphs, if the card holder fails to properly safeguard identity verification information such as the bank card, password, verification code, and transaction verification information, and is at fault, and the issuing bank claims that the card holder should bear corresponding liability, the people's court shall support such a claim.
 
If the card holder fails to take timely measures such as reporting the loss to prevent the expansion of losses, and the issuing bank claims that the card holder should bear the liability for the expanded losses, the people's court shall support such a claim.

 

 
[1] Court Opinion
The Xiaoshan Court ultimately supported all of Xiaokang's claims in accordance with the law, i.e., the bank compensated Xiaokang for the deposit loss of 102,128.31 yuan and the corresponding interest.
 
 
[1] The author's perspective
The "Bank Card Regulations," based on the diverse types of bank card transactions and different entities, stipulate the liability for fraud between different entities in Articles 7 to 12 according to the differences in the entities and legal relationships involved in the disputes, and establish the principle of no double compensation in Article 13.
 
Among them, Article 7 mainly addresses the determination of liability in disputes arising from bank card fraud when a bank card contract legal relationship is established between the card holder and the issuing bank. That is, if the facts are clear and the responsibility is clear, the card holder may request the issuing bank to compensate for the principal and interest of the debit card that was fraudulently used, as well as the overdraft principal, interest, and liquidated damages of the credit card that was fraudulently used.
 
[1] However, it can also be seen from Article 7 that if the cardholder is at fault for failing to properly safeguard identity verification information and transaction verification information such as bank cards, passwords, and verification codes, and the issuing bank claims that the cardholder should bear corresponding responsibility, the people's court shall support such a claim.
 
[2] Additionally, according to regulations, if the cardholder fails to take timely measures such as reporting the loss to prevent the expansion of losses, and the issuing bank claims that the cardholder should bear responsibility for the expanded losses, the people's court shall support such a claim.
 
[3] Therefore, not all cases of deposits "disappearing without a trace" must be borne by the bank. The cardholder also has the obligation to properly safeguard their information. Once a bank card is stolen and used, the cardholder should immediately report the loss to prevent further losses.