Legal Issues About Credit Card Risk Prevention

In China, credit card is a credit payment tool by which people can pay back themoney after consuming first. There are mainly four parties in the legal relationship:issuing bank; cardholder; special merchant and guarantor. There are depositrelationship, credit relations and principal-agent relations between issuing bank andcardholder; financial service relationship and payment guarantee relationship betweenissuing bank and special merchant; business relationship between cardholder andspecial merchant; and guarantee relationship between issuing bank and guarantor.Being a new payment tool, credit card has the feature of credit, convenience andsafety. And compared with tradditional trade, the deal flow there is very different. Itmainly includes some steps as follows: application, consumption, authorization,special merchant’s request payout, issuing bank’s payment, sending the bill andcardholder’s repayment.In credit card business, every party would face some risks. There are cheating,overdraw, cash out etc. for the issuing bank; mismanagement, cheating andcarelessness for the cardholder; information transmission delay and cheating for thespecial merchant; and guarantee liability for the guarantor.According to the legal risks of the credit card, I look for the developed countriesand regions where the credit card business is mature and see how they deal with thesimilar problems. Such as laws in the US, England Franch, South Korea and Taiwan.China’s current law of the credit card is scattered in Civil Law, Criminal Law andFinancial laws and regulations. There are some problems: lack of technicality andsystemic; not enough protection for the cardholder and the personal credit lagalsystem is not sound. So we should formulate the special and systematic credit cardmethod; increase the protection for cardholder and complete the personal creditmachanism and try to provide a better legal environment.