How to Avoid Getting Your Credit Card Hacked

By BankBazaar | June 18, 2015

Credit Card Fraud

Hera Pheri and Catch Me If You Can are popular movies where fraud and swindling are cleverly done.
They might be entertaining enough to watch repeatedly, but nobody would ever want to be the one being cheated.

Credit Card fraud is one of the worst new age ways to be cheated.

Who should bear the costs in case of such security breach?

Recently, the news that a hacker group about had acquired the customer database from a popular Indian app was doing the rounds. The company denied it, but thousands of Indians who read the news panicked. A year ago, a leading US retail giant faced a serious hacking.

Off-late, there have been many instances related to credit card frauds and card details being hacked from third party points. With our sensitive information available on various apps and third party servers, there are higher possibilities of security breaches that can happen anytime.
Across the world, there has been a long running debate on who should bear the costs of such credit card breach – the bank or the retailer. While banks claim that retailers should have better security checks in place, retailers argue that banks should issue cards which are more secure in nature.

Credit card companies are responsible for issuing and activating new cards to the affected card holders. In the case of a recent breach at one of the retail giants in the US, the retailer agreed to pay the card issuer a huge sum for compensating the loss. Even in the past, there have been cases in the US, where retailers have made compensations.

Rules in India

In India, unlike in the USA, in most cases banks insist that customers should bear a part of the cost. Banks may not reverse the entire amount which was wrongly swiped on your card, unless it is proven beyond doubt that you were not present at the place where the fraud took place, for example – in a location abroad when you are in India.

All banks insure themselves through liability insurance covers against such frauds in case of cards with high credit limits get affected. But insurance companies settle the claim only after ensuring that it is not the fault of the bank.

However, the banking regulator has been taking steps to protect customers from credit card frauds. In 2013, RBI directed the issuer/acquiring bank to bear the cost of such fraudulent transactions if the point of sale does not comply with the required security features. In January 2015, a landmark judgement was passed which directed six banks, a telecom company and a card company to pay out a hefty sum to customers who had been victims of online credit card frauds and were wrongly made to bear the loss.

Despite such judgements, as a customer, you are always open to such financial risks.

Here’s what you should do if you detect a fraud or hacking incident on your card:

  • Inform your Bank: You must immediately call your bank to inform of any suspicious activity or unauthorised debit on your card. Banks sometimes decide your liability based on how quickly you inform them.
  • Cancel your card: Next, you must block the card on which the fraudulent transaction took place and request the bank to cancel it.
  • Ask for the issue of a new card: Ask your bank to issue a new card immediately so that your financial transactions are smooth. This is usually done immediately by the bank, as they already have your details.
  • Update new card details with vendors having auto-pay instructions: You may have given auto debit instructions to vendors or other banks for your EMI payments. Remember to update such payment points with your new card details. Otherwise, you will be charged with penalties when the payment date is due, as your old card is no longer functional.
  • Analyse all other card statements: When you are done with this, remember to go through the statements of all your other credit cards, in order to make sure everything is in order.

While the above steps should be taken in case of a credit card fraud, you can also safeguard yourself by proactively taking steps to prevent such an incident.

Here are some top To-Dos:

  • Check your statements regularly: Always make it a practice to check your credit card statement every month before you pay the dues. Sometimes, there may be small debits which can escape the eye. This may eventually give way to a larger fraud.
  • Use chip based cards which require a PIN: Ask your bank for a chip based card which require you to input a PIN every time you make a transaction with a third party. This is safer when compared to ordinary cards.
  • Activate card activity alerts: Activate instant messages whenever there is a credit card transaction on your card.
  • Do not store your card details anywhere: Remember not to store your card details on any website or mobile app. You may have to pay a hefty price for just opting for convenience!

As easy as it is to swipe a card, it’s best to take all the right precautions. Even Frank Abagnale Jr from Catch Me If You Can got caught eventually, and it isn’t actually possible to get as lucky as Baburao and Ghanshyam, whatever Hera Pheri you might have picked up from them.

 

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