The Financial Supervisory Service is reviewing drawing up guidelines that would allow cardholders who suffered monetary losses from voice phishing (telephone financial fraud) or smishing (fraud luring victims through text links) to be compensated. Under current law, it is difficult for cardholders to be compensated even if they suffer losses from voice phishing or smishing.
According to the financial authorities on the 5th, the Financial Supervisory Service (FSS) is reviewing a plan to expand the scope of compensation for members who suffered losses due to fraudulent card use next year. The FSS is also reviewing ways to compensate for losses caused by voice phishing and smishing.
Under the current Specialized Credit Finance Business Act, the scope of fraudulent use for which card company members can be compensated includes theft or loss, use of forged or altered credit cards, hacking, and identity theft. When losses occur for these reasons, the card company can compensate part or all of the amount.
However, in the case of voice phishing or smishing, because members suffer monetary losses by directly entering card information into malicious applications (apps) or websites, it does not fall within the scope of compensation for fraudulent use under the act.
As losses from voice phishing and smishing have recently increased, some card companies are voluntarily compensating certain members in cases that are small in amount or special. The Financial Supervisory Service (FSS) is preparing such measures, saying that if only some card companies compensate for voice phishing and smishing losses, there could be fairness concerns.
The Financial Supervisory Service (FSS) also plans to clarify compensation standards for fraudulent use losses arising from the use of forged or altered credit cards, hacking, and identity theft. In 2022, the Credit Finance Association established model standards on compensation for card fraudulent use losses with the financial authorities. These standards specify only criteria for the most common case of fraudulent use due to theft or loss.
The Financial Supervisory Service (FSS) sees a high possibility that fraudulent use will increase as cyberattacks targeting financial firms continue, and is moving to prepare in advance. Once guidelines are in place, it appears there will be grounds for cardholders to receive partial compensation even if they suffer losses from voice phishing or smishing.
The Financial Supervisory Service (FSS) is also preparing an organizational overhaul to strengthen consumer protection. An FSS official said, "We are planning measures that can broaden the scope of consumer compensation to the extent that they do not conflict with the current Specialized Credit Finance Business Act."