Credit Card Fraud: Banks Have To Prove Customer Acted Fraudulently, Says RBI

MUMBAI: Customers will no longer have to spend hours convincing bankers that their credit or debit card was misused. A directive issued by an arm of the banking regulator puts the responsibility on banks to prove that the consumer has acted fraudulently. In the past, the onus on proving innocence was on the customer. Bank customers have often disputed transactions shown on their credit card bills and declined to pay.
This has resulted in banks levying late-payment penalty. The new rule is announced by the Banking Cdes and Standard Board of India (BCSBI) that works to protect customer rights. It makes banks responsible to find evidence that the customer had authorised and was responsible for the disputed transactions.
Nearly a fourth of the 17,867 complaints that the banks’ ombudsmen had received in 2012-13 was related to ATM, debit and credit card transactions, according to Reserve Bank of India data. Measures like authentication based on personal identification number (PIN) that creates a second layer of security, sending a message to the customer after every transaction and inbuilt cameras at ATM machines are aimed at preventing misuse of cards and helping bankers verify transactions.
Incidentally, the new rule has increased the cap on customers’ liability for unauthorised transactions to Rs10,000 from Rs1,000 before. “This is mainly due to the depreciating value of money and also these days, cards are used for high-value transactions,” said BCSBI chairman AC Mahajan. If a customer has failed to inform his bank about changes in contact information such as email, mobile number and mailing address, the bank will not be liable for any loss to the customer as a result of someone misusing his card.
The customer will also be liable to any misuse of card until he informs the bank about incidents like loss of card or disclosing the PIN number to someone. But the new rules will protect the customer in cases such as someone hacking into the system. “Many a time, scamsters succeed in hoodwinking the system through use of technology and cause the loss. Hence, the provision in the code to safeguard the card users,” Mahajan said.
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Courtesy: Economic Times