Israel’s Justice Ministry is moving ahead with a legislative amendment aimed at dealing with rising financial fraud involving credit cards. The proposal began two years ago and is designed to broaden consumer protection in cases where money is taken after the cardholder provided a secret code, even when that code was obtained through impersonation or sent to the customer’s mobile phone for approval.
Under current law, credit card companies are not automatically required to refund money charged using a secret code that the cardholder disclosed, even if the transaction involved fraud. The new version of the Payment Services Law, first advanced in 2024, would extend the refund regime to situations where a person gave the code because of deception, treating those cases similarly to the theft or loss of a payment instrument.
The latest draft was published after comments from the banks and now includes a mechanism for payment companies to share information about fraud schemes they encounter, in order to prevent the next attack. The information to be exchanged would cover fraud methods, and the data would be stored in an anonymous database so financial institutions can prepare accordingly.
The amendment will next go to the ministerial committee for approval. Deputy Attorney General for Civil Law Carmit Yulis said the draft is meant to give authorities “better tools to deal with the phenomenon of financial fraud,” which she said is expanding. She added that the earlier draft would create “a kind of insurance cover for good-faith consumers who were deceived,” including cases of impersonation, and that they would get their money back. Officials involved in drafting the bill said the 2024 text addresses frauds in which criminals pose as an authority, a customer’s bank, or a payment app, making it unclear whether the payment company must refund the loss or whether the customer bears responsibility for revealing secret details. The work was done by the Justice Ministry in coordination with the Bank of Israel and the Privacy Protection Authority.
