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The ePayments Code: What you need to know about this key consumer protection framework in Australia

Published on September 16, 2024 by Selwyn Black and Alexander HughesSelwyn Black and Alexander Hughes

In the digital age electronic payments are an integral part of our everyday life. With the increase in online transactions, mobile banking, and credit card usage, as well as the increase in cybercriminal activity, the need for robust consumer protection mechanisms is even more critical. In Australia, the ePayments Code plays a pivotal role in safeguarding consumers in their dealings with electronic payments. This article explores the ePayments Code, its significance, and why consumers should be particularly mindful of its provisions concerning unauthorised transactions on their credit cards.

What is the ePayments Code?

The ePayments Code is a regulatory framework administered by the Australian Securities and Investments Commission (ASIC). It sets out the rights and responsibilities of consumers and financial institutions in electronic payment transactions. The Code applies to a wide range of electronic transactions, including:

• ATM withdrawals
• Online payments
• Credit and debit card transactions
• BPAY transactions
• Direct debits

While adherence to the Code is voluntary, most major financial institutions in Australia have subscribed to it, providing a standardised approach to managing electronic payments. It is also important to note that the Code does not extend to small businesses who make internet banking transactions. ASIC defines small business as an organisation with less than 100 employees.

Key features of the ePayments Code

1. Transparency and disclosure – the Code mandates that financial institutions provide clear and accurate information about their electronic payment products and services. This includes details on fees, charges, terms, and conditions. By ensuring transparency, the Code helps consumers make informed decisions.
2. Dispute resolution – one of the critical features of the ePayments Code is its provision for dispute resolution. It outlines the steps consumers can take if they encounter issues with their electronic payments, such as unauthorised transactions or errors. Financial institutions must investigate and resolve complaints promptly.
3. Consumer protection – the Code offers robust consumer protection, particularly concerning unauthorised transactions. It delineates the liability of consumers and financial institutions, ensuring that consumers are not unfairly burdened in cases of fraud or system errors.
4. Security requirements – the Code sets out security requirements for electronic payment systems, including the need for PINs, passwords, and other authentication methods. It also provides guidelines on reporting lost or stolen cards and devices.

Why consumers should be aware of the ePayments Code

Understanding the Code is crucial for consumers, especially regarding unauthorised transactions using credit cards. The reasons for this include: –

1. Liability for unauthorised transactions

The Code outlines the circumstances under which a consumer may be held liable for unauthorised transactions. Generally, if a consumer has not contributed to the loss (for example, by not disclosing your PIN or password), then they are not liable for unauthorised transactions. However, if a consumer has been negligent, such as by failing to promptly report a lost or stolen card, they may be liable up to a certain limit.

This provision is vital for consumers to understand, as it determines their financial responsibility in the event of fraud. By being aware of their rights and obligations under the Code, consumers can take proactive measures to protect themselves and minimise their liability.

2. Timely reporting and resolution

The Code emphasises the importance of promptly reporting unauthorised transactions. The sooner an issue is reported, the quicker it can be resolved. The Code requires financial institutions to investigate complaints and resolve them within a reasonable timeframe, usually within 21 days.

Knowing the timeline and procedure for reporting issues can help consumers act swiftly and avoid prolonged disputes. Additionally, understanding the dispute resolution process can provide peace of mind, knowing that there is a structured mechanism to address concerns.

3. Security measures and best practices

The Code provides guidelines on security measures that consumers should adhere to. This includes:

• keeping PINs and passwords secure;
• not sharing PINs and password with others; and
• monitoring account activity regularly.

By following these guidelines, consumers can reduce the risk of unauthorised transactions and fraud.

Furthermore, the Code encourages financial institutions to provide consumers with tools to enhance security, such as two-factor authentication and SMS alerts for transactions. Being made aware of these tools can help consumers take advantage of additional security measures.

4. Consumer awareness and education

One of the broader goals of the Code is to enhance consumer awareness and education. By understanding the Code, consumers can better navigate the complexities of electronic payments. This knowledge allows consumers to make informed decisions, protect their financial information, and assert their rights in the event of a dispute.

The Code is a crucial component of Australia’s financial regulatory landscape. It provides a framework for protecting the consumer in the realm of electronic payments, ensuring transparency, security, and fairness. For consumers, being aware of the Code is not just about understanding their rights and responsibilities but also about taking proactive steps to safeguard their financial well-being. In a world where electronic payments are increasingly prevalent, the potential for unauthorised transactions and fraud is only increasing. The Code offers a vital layer of protection, ensuring that consumers are not left to fend for themselves.

Please note that this article does not constitute legal advice. If you are seeking professional advice on any legal matters, you can contact Carroll & O’Dea Lawyers on 1800 059 278 or via our Contact Page and one of our lawyers will be able to assist you.