MANY small retailers remain confused about who is liable in the event of the fraudulent use of the new chip and PIN credit cards, according to the Federation of Small Businesses.

Feedback from members of Britain's biggest business organisation suggests that small firms in Worcestershire and Herefordshire are in the dark about where the liability lies if they rent their terminal from a bank and haven't yet had it upgraded.

"Consumers continue to be protected from card fraud losses following the chip and PIN changes - but as of now retailers without the new technology must shoulder the responsibility for card fraud that could have been picked up by the new devises," said Angela Smith, spokesman for FSB Herefordshire, Worcestershire and Shropshire.

"Businesses are also confused about who shoulders the risk when a customer forgets their PIN number and wants to sign instead.

"In this case the retailer will not be held liable."