With the government encouraging digital payments through several initiatives, the growing popularity of e-commerce has led to an increased adoption of credit card transactions in India. During the period between October 2016 and September 2017, the total amount of credit card transactions at point-of-sale (POS) terminals registered a growth of 25 percent. However, increased adoption of credit card also brings with it increased chances of credit card fraud. Fraudsters can duplicate your card at POS terminals and ATMs or by securing your customer details over the phone (vishing) or through e-mails (phishing). Sahil Arora – VP & Head of Payment Products, Paisabazaar.com suggests a step-by-step guide on what should be your course of action after detecting a credit card fraud.
Inform the bank
The first thing to do on detecting fraudulent transactions is to report them to your card issuer immediately to block your card from further misuse. You can also report the fraudulent transaction and get your card blocked by visiting your card issuer’s website or its branch premises.
Who pays for the losses arising out of the fraudulent transaction?
RBI has made sweeping changes regarding the liability of credit card issuer and credit card holder arising out of credit card fraud. The changes are primarily aimed at increasing transparency in fraud reporting and resolution procedures of credit card issuers. By introducing differential customer liability for third-party breaches, the changes seek to encourage cardholders to exercise more vigilance and early reporting of disputed transactions by the cardholders.
Your liability for the fraudulent transaction will be zero if it is caused by negligence or deficiency on the part of the card issuer. In case your negligence led to the fraud, you will bear the entire loss till the reporting of the unauthorized transactions. Any losses caused after the reporting of the unauthorised transactions will be borne by the card issuer. The bank will bear the entire cost if the fraud was caused by a third party breach and you reported that transaction to your card issuer within three working days of receiving any communication regarding that transaction.
If there is a delay of four to seven working days on notifying that transaction, your liability will be up to Rs 10,000 and Rs 25,000 for credit cards with credit limit of up to Rs 5 lakhs and above Rs 5 lakhs respectively. In case of delay in reporting the fraudulent transaction beyond seven days, your liability for losses will be as per your credit issuer’s policy.
Impact of your complaint
Once you report a fraudulent transaction, your card issuer will immediately block your card. If the fraud was caused by a third party breach or negligence on the part of the bank, your card issuer is bound to reverse the amount of unauthorized transaction within 10 working days of reporting the transaction. However, the amount credited will be subject to your own liability arising out of the transaction. For example, assume that you have a credit card with a credit limit of Rs 4 lakh and there was a fraudulent transaction of Rs 45,000 on that card. If you report that transaction to your card issuer after 5 working days of the date of fraud, your liability will be fixed at Rs 10,000 and the card issuer will credit your credit card account with Rs 35,000 within working 10 days of reporting that fraud. However, credit card issuers are free to waive off your liability arising from a fraudulent transaction, even if your own negligence led to that fraud.
Apart from the reversal of the amount involved in the fraudulent transaction, card issuers are also bound to resolve your complaint within 90 days of receiving it. Even if the card issuer fails to resolve the complaint, it is bound to reverse the transaction within 90 days as the burden of proving your liability and involvement rests with the cardholder. Moreover, the card issuer has to ensure that the cardholder does not bear any additional interest cost arising out of any fraudulent transaction.
What happens if your bank wrongly discharges your complaint?
If your card issuer deviates from the RBI-set guidelines or wrongly allocates your liability arising from the fraudulent transaction, you can approach the Banking Ombudsman for dispute resolution. Apart the amount involved in the disputed transaction, you may also claim compensation for the inconveniences caused by the card issuer’s handling of your complaint. In case you are not satisfied with Ombudsman’s ruling, then you can file an appeal against it before the Appellate Authority within 30 days of receiving the ruling. The Appellate Authority is vested with an RBI Deputy Governor. If you are still not satisfied with its ruling, then you can approach High Court or consumer forum against the ruling.
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