Senator Lundy asked me questions in relation to the following four matters on 22 June 2005:

(1)      Was the government informed six months ago that Australians were exposed to potential card fraud?

(2)      Why was no consumer alert issued by government six months ago?

(3)      Will the banks be permitted to charge customers for obtaining statements for purpose of checking if they have been defrauded?

(4)      Are customers responsible for identifying fraudulent transactions before they can be reimbursed?

The Treasurer has provided the following answers to Senator Lundy’s question:

(1)      Relevant Ministers have made it clear that they only became aware of the credit card security breach in the United States earlier this week when it was reported in the press.

(2)      It is understood that suspicious transactions, later determined to be associated with the US breach, were first reported in December 2004.

Visa International has advised that it was not until May 2005 that there was formal recognition of the extent of the problem. MasterCard and Visa were instructed by the US authorities not to make any public announcements regarding the situation until investigations were carried out by the Federal Bureau of Investigations (FBI). The FBI declared the matter a crime scene on 1 June 2005. It was not until the end of the week commencing 13 June (Thursday/Friday) that the FBI advised that MasterCard and Visa could speak publicly.

ANZ, NAB, the Commonwealth Bank (CBA)and Westpac have been monitoring the situation and progressively contacting affected customers to cancel and replace accounts where there have been suspicious transactions.

(3)      The Australian Bankers Association has had discussions with the banks on this issue and as of 23 June 2005 the majority of banks have responded stating affected customers will be able to obtain statements free of charge, including the major banks.

(4)      Australian banks have sophisticated fraud detection systems in place to identify suspicious transactions. The banks have been alerting customers where suspicious transactions have been detected and cards have been reissued.

However, the Government encourages all credit card users to review their statements on a regular basis and report any suspicious transactions to their financial institution. In particular, Australian banks are urging credit card customers who have travelled to the US or used their cards to buy goods from a US-based online merchant, to check their statements and report any unauthorised transactions to their financial institution.

Australian consumers will not be liable for any resulting unauthorised transactions. The Electronic Funds Transfer Code of Conduct, administered by the Australian Securities and Investment Commission (ASIC), protects account holders from liability in respect of unauthorised transactions where they have not contributed to the loss.