Due to the significant increase in banking fraud, RBI has now issued new rules to make electronic transactions safer for customers. Read on to know more.
What would you do if your account was charged for a transaction you didn’t authorise? Imagine receiving an SMS from your bank for a transaction made on your Credit Card or a debit made from your Savings Account? It’s enough to make you break out into a cold sweat.
Post demonetisation, the country has witnessed a peak in banking fraud and other such fraudulent digital transactions. Our cashless economy has given birth to a new breed of criminals who are out there trying to hack into the system and make things awry for the common people.
With the rise in customer complaints regarding unauthorised transactions, the Reserve Bank of India (RBI), came up with new rules in July 2017, which make electronic transactions relatively safer for customers.
Additional Reading: Demonetisation First Anniversary: How It Has Impacted Your Personal Finance
On July 6, 2017, the RBI issued a notification that protects customers and declares limited liability for them in case of unauthorised electronic banking transactions. However, banks have to prove that the case is fraudulent and the customer should inform the bank as soon as possible to avoid being penalised.
What does this mean?
The Banks responsibility:
According to the RBIs notification, “the systems and procedures in banks must be designed to make customers feel safe about carrying out electronic banking transactions”. This would mean that the onus is on the banks to mandate the customers to register for SMS alerts and also email alerts.
Additionally, banks have been instructed to not offer the facility of electronic transactions, other than ATM cash withdrawals, to customers who do not provide a mobile number. Banks also have to educate customers on notifying them as soon as possible should they come across any strange and unauthorised activity in their account.
Additional Reading: Avail Banking Services Using A Basic Mobile Phone
Zero customer liability:
If the said fraudulent transaction happens due to negligence from the bank’s end, then the customer is not liable. For example, if there is a glitch in the backend process and the customer’s information has been compromised, then the customer isn’t liable to pay. This will also be the case if a bank employee has been found guilty of indulging in fraudulent activities that compromise customer information.
Moreover, the RBI notification also states that if a “third-party” breach happens wherein neither the bank nor the customer is at fault, and the customer informs the bank within three working days, then the customer isn’t liable to pay.
Now, you may wonder who a “third-party” is. They are scammers, fraudsters, hackers and the likes who carry out suspicious transactions using your account. These thieves can use different ways to dupe you.
Some of the popular methods they use are skimming and card trapping at ATMs, hacking through public Wi-Fi, setting up malware in ATMs and bank servers or at merchant outlets where you swipe your Debit/ Credit Card etc.
Additional Reading: Epic Credit Card Frauds And How to Avoid Them
Limited liability of a customer:
So, it’s clear that you as a customer will not be liable to pay if a wrongful debit from your account has taken place due to the bank’s negligence. However, if this fraud has happened because of your own carelessness, then you will certainly be held liable.
There could be a lot of scenarios where you could have given out your card details to callers claiming they are bank representatives seeking sensitive information from you.
BB Tip: Remember, your bank will never ask you for your card information, PIN number or CVV numbers through a phone call!
Additional Reading: 11 Tips To Scam-Proof Your Online Transactions
Or perhaps you shared your password or PIN with someone or left it lying around for someone to use without your knowledge.
The silver lining to this predicament is that even though a transaction may have happened due to your negligence, if you report it to the bank within seven working days (and after three days) from receiving the debit message, the RBI notification says that the per transaction liability of the customer will be limited to the transaction value or an amount set by the Central Bank, whichever is lower.
Here are the details on the maximum liability a customer may have to incur on various types of accounts:
Type Of Account
|Bank savings bank deposit accounts||Rs. 5,000|
|All other savings bank accounts||Rs. 10,000|
|Pre-paid payment instruments, gift cards||Rs. 10,000|
|Current/ Cash Credit/ Overdraft Accounts of MSMEs||Rs. 10,000|
|Current accounts/ cash credit/ overdraft accounts of with annual average balance (during 365 days preceding the incidence of fraud)/ limit up to Rs. 25 lakhs||Rs. 10,000|
|Credit Cards with limit up to Rs. 5 lakhs||Rs. 10,000|
|All other current/ cash credit/overdraft accounts||Rs. 25,000|
|Credit Cards with limit above Rs. 5 lakhs||Rs. 25,000|
Additional Reading: The Difference Between A Current Account And Savings Account
The important thing to remember out here is that the RBI also stated that if you happen to take more than seven days to report the incident, then, “the customer liability shall be determined as per the banks board approved policy”.
How long will it take for the reversal?
Banks will have to credit or reverse the unauthorised electronic transaction to the customer’s account within 10 working days from the date of notification by the customer.
And once reported, in case of a Debit Card or bank account fraud, the bank should ensure that the customer does not suffer loss of interest.
If the transaction has happened on a Credit Card, the customer should not bear additional burden of interest.
Most importantly, once the issue has been reported, the bank has to resolve the case within 90 days from the receipt of the complaint.
Additional Reading: How To Register Your Banking Complaints Online With RBI’s Banking Ombudsman
What are banks doing about getting a system in place?
The RBI circular states that banks must provide customers with 24/7 access through multiple channels like SMS, email, IVR and so on for reporting these unauthorised transactions.
Banks have also been asked to provide customers with a new facility that allows them to ‘’instantly respond by ‘Reply’ to the SMS and email alerts and the customer should not be required to search for a webpage or an email address to notify the objection”.
What should you do as a customer?
Although completely clamping down on fraud is a monumental task, as a customer you can do the following things to secure yourself:
- The first step is to make sure you subscribe to the SMS and email alerts linked to your account or Credit Card.
- The second step is to intimate the bank immediately if you see any unusual or unauthorised activity in your account, a suspicious debit, or your Credit Card being misused. You need to inform the bank within three working days. If you don’t, your liability will increase depending on the delay.
- Never share your passwords, PIN, card information or leave it unattended at places where it can be misused.
- Never reveal your bank account numbers, Credit Card numbers and other related information to telecallers who may say they’re calling on behalf of the bank. Always challenge them and question them or ask them to send you an email, which you can directly cross check with your bank.
- Beware of skimmers at ATMs or merchant outlets and report any suspicious instances to the bank.
- Never save your card information if you’re shopping online on e-commerce websites. Always clear your cache and other cookies once you’ve made an online purchase.
- Keep yourself updated on the bank’s processes with regards to the various products they offer (mainly Debit and Credit Cards).
Additional Reading: 10 Smart Ways to Avoid Credit Card Frauds
Earlier this year the RBI released shocking data wherein it reported 3,870 cases of fraud worth Rs. 17,750 crores. And this number is likely to rise given the dependency on online transactions.
But, since our lives will only get more reliant on technology, scamsters will only come up with innovative ways to trick us and steal our money. A little caution could go a long way in deterring them.
And if you’re looking for safe places to keep your money, you’re in luck. We have a bunch of options for you.