The Banking Supervision Department is acting to reduce the phenomenon of merchants defrauding customers

Stories have recently been published of cases where customers, particularly the elderly, fell victim to fraud by merchants who charge customers amounts that sometimes reach thousands of shekels through credit cards. The Supervisor of Banks met with Minister for Social Equality Gila Gamliel and Mk Itzik Shmuli to discuss ways to reduce this phenomenon.  In view of this, the Banking Supervision Department is publishing a draft amendment to Directive on Merchant Acquirers and Acquiring Payment Card Transactions.  In parallel, legislation is planned to strengthen the mechanisms to prevent the defrauding of senior citizens.  The Banking Supervision Department will assist with this legislation.

 

In general, an acquirer is not permitted to stop settlement of transactions by a particular merchant without reasonable cause. In accordance with the amendment published today, an acquirer will be permitted to refuse to provide settlement services to a merchant, or to refuse to execute a particular transaction, if the acquirer suspects that the merchant’s activity involves defrauding a customer.

 

The Directive sets out sample criteria, each of which can be seen as establishing a suspicion of defrauding customers.  For instance, a high rate of repeat charges relative to the merchant’s turnover or relative to the quantity of transactions, or a high rate of customer complaints against a merchant regarding fraud, particularly complaints by older customers, could establish suspicion of defrauding customers that would allow an acquirer to halt settlements services to the merchant.

 

Minister of Social Equality Gila Gamliel said, “The exploitation of senior citizens through manipulation is an ugly and worrying phenomenon, and we will make sure that it is completely uprooted.  This amendment is an important part of the Ministry of Social Equality’s national program to deal with the exploitation of seniors, which we are now starting to implement.  I would like to thank Supervisor of Banks Dr. Hedva Ber for undertaking this joint struggle against the swindling of senior citizens.”

 

Supervisor of Banks Dr. Hedva Ber said, “The Directive we have published today will make it possible to reduce the serious phenomenon of merchants defrauding the elderly.  We are enabling merchant-acquirers to halt settlement services to merchants where there is suspicion that they are exploiting customers.  I thank Minister for Social Equality Gila Gamliel and MK Itzik Shmuli, who brought this serious issue to our attention and cooperated with us in efforts to eradicate it.”

 

MK Itzik Shmuli said, “Disconnecting the economic oxygen from swindlers is a critical step in our ability to deal with the contemptible phenomenon of defrauding senior citizens.  We will insist that it also be included in legislation that I am advancing.  The real and serious undertaking by the Banking Supervision Department led by Dr. Hedva Ber is welcome.  I am pleased that this cooperation is proving itself and will lead to improved protection of consumers.”​