Money

Sharp rise in 'malicious' credit cheats

By Li jiabao (China Daily)
Updated: 2011-04-06 16:52

The capital has seen a sharp rise in the number of shoppers who max out on credit cards and refuse to repay, according to new research.

Of the more than 490 cases of credit card fraud tried between 2003 and 2010, roughly 12 percent involved "malicious overdrafts", shows a report released last Saturday by Beijing No 2 Intermediate People's Court.

It states that the number found guilty of the charge - used for cardholders who purposely spend big and then attempt to dodge repayments - soared from none in 2003 to about 40 last year.

Offenders can string out "malicious overdrafts" from six months to as much as four years, with the majority targeting commercial banks by using false employment certificates or income records, said judge Wang Min. She explained that the money is often hard to recover.

In one case, a jobless man called Wu took out 10 credit cards from seven merchant banks between July 2008 and June 2009 before splashing out more than 110,000 yuan.

The money was never repaid, although Wu was eventually prosecuted.

Some offenders or their family pay the proceeds back to financial institutions in mitigation, but so far only 35 cases have resulted in the money being repaid.

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"The bankers' eagerness to issue credit cards to increase their market share in the past few years is largely behind the increase in credit card fraud," said Wang.

To attract customers, some banks set up stalls at supermarkets and on college campuses, where people can sign up for credit cards with just their identity cards.

Banks rate cardholders' credit using their employment and income situation, but the tests are not thorough enough, says the report.

Residents with bad credit ratings or who have been found guilty of building up "malicious overdrafts" are usually blacklisted, although the banks rarely share the information on their databases, so the move fails to deter repeat offenders.

The authors of the court report call for stricter credit card checks, while they warn banks to be wary of issuing cards to migrant workers, students or other group who do not have fixed incomes.