Inform the bank call centre immediately
The moment you find an unauthorized transaction on your card, immediately inform the call centre without any delay. When you dial the bank’s call centre and register the complaint, you are assigned a complaint file number and confirmation SMS is sent. Keep that for your records as you must mention that file number in all your future correspondence. These call centres operate on a 24X7 basis. A simpler method is to use the card block facility in your mobile app on your smart phone. That becomes effectively immediately and you can follow it up with a complaint to the call centre to recover the unauthorized transaction amount.
Liability in case of unauthorized transaction on credit cards
There are two scenarios here. If the transaction has happened due to the lack of due diligence or fraud by some employee of the bank, your liability is zero. One way to prove such charges is to ensure that all online credit card transactions are only approved based on the OTP received on the mobile. That can be a good way to ward off such frauds.
The other scenario is when the transaction has happened due to your own negligence. You may have not realized about a skimmer in the ATM or you may have responded to phishing mails. In such cases, your liability is zero is if you intimate the bank within 3 days of the transaction. This is something you must strictly adhere to.
In case you report the unauthorized transaction between 4-7 days from the actual transaction, your liability will be what the bank decides or the value of the transaction, whichever is lower. Anything above 7 days, the liability is decided by the bank.
Card issuers like HDFC Bank and SBI even call up the customer before authorizing large international transactions on the internet. AMEX gives you a facility wherein you can seek approval for each transaction and nothing else will be permitted. These are additional safety checks you can use.
Liability in case of unauthorized transaction on debit card
In the case of credit cards, Visa and Master Card allow you to cancel the transaction after which it is taken to the disputes tribunal. Such transactions are reversed immediately. But the problem in a debit card is that the transaction is debited to your bank account.
In India debit cards have become popular due to the natural aversion to credit. How do you handle a debit card fraud? Like in the previous case, the first thing to do is to inform the bank. If you have an online app on your smart phone, you can first block the card or change your PIN before complaining to the bank.
RBI has set limits to liability in case of different bank accounts. For example, your maximum liability in a zero-balance basic bank account is Rs5,000. The liability for such fraudulent usage can go as high as Rs10,000 in the cases of other bank accounts. In the case of larger value current accounts, liability can go up to Rs25,000.
When you report a fraudulent transaction to the bank immediately, the burden of proof falls on the bank. The bank is absolved only if it can prove that you were complicit in the fraudulent transaction. In case you find the bank unnecessarily delaying the resolution, you can approach the bank ombudsman. If you are not happy with the ombudsman ruling, you can reach out to the appellate authority within 30 days. Normally, funds will come back to you if it was genuinely outside your control.
You can take some precautions to be safer
In most cases, the unauthorized debits are reversed in 7-10 days. However, there are simple steps to make your card usage safer.
- Insist on mobile OTP authorization for all online transactions and for offline transactions above a certain threshold.
- Avoid online transactions from cyber café and from mobiles using unsecure wi-fi set ups like airport, malls etc.
- Only conduct online purchases with reputed websites which are secured (https://) and keep a tab of your online transactions.
- Never respond to phishing mails seeking details of your card number, expiry, PIN etc. These are recipes for fraud.
- Register for transaction SMS alerts and ideally tell your bank that you do not want to opt for contactless swipe even for low value transactions.