Protecting Against Credit Card Fraud: What to Do if You Are a Victim

Recently, a friend of mine faced a credit card fraud that saw a loss of over 200 rupees. Despite having virus-free and protected computers, this incident raises an important question: How can such frauds occur, and what can you do if you find yourself in a similar situation?

Preventing Online Purchases: Vigilance is Key

One of the critical aspects in preventing such frauds is ensuring that you only purchase from reputable suppliers with a widespread customer base. This approach significantly reduces the risk of encountering fake websites or being duped by employees in smaller organizations due to internal security lapses.

Types of Scams and Fake Websites

It is common to come across websites that have a similar spelling or URL ending, such as axis Business Solution. These fake websites are designed to store your data, leading to potential fraud. Always opt for the one-time-password (OTP) option to add an extra layer of security.

What to Do if a Fraudulent Transaction Occurs

If you suspect a fraudulent transaction, it is essential to act swiftly:

Inform Your Bank As Soon As Possible: Contact your bank via phone banking, SMS, email, or visit a branch to report the unauthorized transaction. The immediate action will trigger their loss and fraud reporting system, which will acknowledge your complaint and share a registered complaint number. Understand Your Liability: Depending on when you report the incident, your liability can vary. You can be liable if you delay reporting by more than 3 working days. Here's a breakdown of the scenarios and liabilities:

Customer Liability During Unauthorised Transactions

The time taken to report the fraudulent transaction and your liability will be as follows:

Time Taken to Report Customer’s Liability Within 3 working days Zero liability Within 4 to 7 working days Transaction amount or the amount mentioned in Table 2, whichever is lower More than 7 working days As per bank’s Board-approved policy

Details of Customer Liability in Case of Fraudulent Transactions By Account Type:

Type of Account Maximum Liability Basic Savings Bank Account Rs 5000 All Other Savings Bank Accounts Rs 10000 Pre-paid Instruments and Gift Cards Rs 10000 Current/Cash Credit/Overdraft Accounts of MSMEs Rs 10000 Current Accounts/Cash Credit/Overdraft Accounts of Individuals with Annual Average Balance During 365 Days Preceding the Incidence of Fraud/Limit up to Rs.25 Lakhs Rs 10000 Credit Cards with Limit Up to Rs.5 Lakhs Rs 10000 All Other Current/Cash Credit/Overdraft Accounts Rs 10000 Credit Cards with Limit Above Rs.5 Lakhs Rs 25000

What Happens After Reporting a Fraudulent Transaction

Once you notify the bank, they will immediately block your account or card to prevent any further unauthorized transactions. However, if the initial unauthorized transaction happened due to your negligence and you reported it after 3 working days, the bank will determine your liability according to RBI guidelines as outlined in the above tables. If the bank disputes the transaction, the burden of proof falls on the bank to prove your complicity.

RBI Guidelines for Banks on Protecting Customers

The Reserve Bank of India (RBI) has established a two-part approach to dealing with such frauds:

Advisory and Awareness Campaigns: Banks must provide continuous advice to customers on how to protect themselves from electronic banking and payments-related frauds. This can be shared via emails, SMSes, and IVR. Processes and Mechanisms: Banks must set up systems and procedures to ensure safe and secure electronic banking transactions, robust fraud detection and prevention mechanisms, and processes to assess the risks and liabilities arising from unauthorized transactions.

This article offers comprehensive advice for protecting yourself from credit card fraud and understanding your liability if a fraudulent transaction occurs. By being vigilant and taking appropriate steps, you can minimize the risk of financial loss.