Here are a few points on Online banking frauds so that you Beware of your liability:
Has your debit card been wrongfully charged for transactions you didn’t initiate?
It looks like you got duped online!
The next thing would be “Who is accountable for such transaction?”
“Who bears the burden to make the losses good”?
To address such kind of customer grievances, RBI has come up with a set of guidelines for the banks. These primarily relate to unauthorized transactions resulting in debits to the customer’s accounts or cards.
RBI has moved a step further to provide the criteria for determining the extent of customer liability in these circumstances.
Types of online banking transactions
Usually, the online banking transactions that you conduct fall under these categories:
1. There can be remote or online payment transactions. Such transactions are those that can be performed without physically presenting your debit/credit card.
For instance: internet banking, mobile banking, card not present (CNP) transactions and Pre-paid Payment Instruments.
2. Then there are face-to-face or proximity payment transactions; such transactions require you to physically present your payment instrument at the point of transaction.
For example: using a debit card at the ATM for cash withdrawal or at a Point of Sale (POS) terminal, etc.
Loss/Fraud Reporting Facility to be provided by the banks
RBI has advised banks to extend reporting facilities to the customer in the event of an online banking related fraud.
As an aware customer, you may consult your bank branch for the following facilities:
1. Mandatory registration for SMS alerts and e-mail alerts, wherever available, for electronic banking transactions.
The SMS alerts will be sent to your registered mobile number. The email alerts may be sent, wherever registered.
2. 24×7 access to multiple channels like the website, phone banking, SMS, e-mail, IVR, a dedicated toll-free helpline, etc. for reporting unauthorized transactions.
3. Channels that can be accessed to report loss or theft of payment instrument such as debit/credit card.
4. Upon receipt of SMS alert, the facility to instantly respond by “Reply” to the SMS and e-mail alerts.
5. A direct link for lodging the complaints, with specific option to report unauthorized electronic transactions that is available on the home page of the bank’s website.
6. An immediate/auto response is sent to you acknowledging the complaint along with the registered complaint number.
Along with this, banks would be required to record the time and date of delivery of your message. It will form the basis to determine the extent of your liability in the event of a loss.
On receipt of the report of an unauthorized transaction from the customer, banks must take immediate steps to prevent further unauthorized transactions in the account.
What do you need to do as a customer?
Banks are performing their share of due diligence as far as fraud prevention and detection is concerned.
You, as a responsible customer, need to ensure fulfillment of preliminaries to avoid getting into troublesome situations.
You may perform the following steps to minimize losses from online banking frauds:
1. Register your mobile number with the bank branch at the time of opening of the account. In case you missed it, then visit your branch at the earliest to get your mobile number registered.
2. As soon as you receive an SMS alert of a transaction which you didn’t perform; you need to notify this to the bank. The longer the delay in intimation, the higher would be the risk of loss.
Also read: 8 credit card myths busted
Zero Liability of the Customer
Under the revised guidelines, RBI has identified situations wherein you won’t be liable for unauthorized transactions.
You will have zero liability for fraudulent transactions in the following events:
1. Contributory fraud/ negligence/ deficiency on the part of the bank. It is irrespective of the fact whether or not you reported the transaction.
2. There has been a breach in the third party system for which neither the bank nor you are responsible.
In such a case, your liability will be zero provided you notify the bank within three working days of receiving the communication from the bank regarding the unauthorized transaction.
The burden of proving customer liability in case of unauthorized electronic banking transactions shall lie on the bank.
RBI has specified maximum liability of the customer in matters of third-party breaches. In such cases, neither the bank nor the customer stands responsible for any unauthorized transactions.
The following table highlights the maximum liability of customer in case of third party delinquency:
Fraud Reporting time & your liability: A relationship
The fraud reporting system sends an alert whenever a transaction happens. If you think it’s a fraudulent transaction, you are immediately required to bring this to the bank’s notice.
Especially when the fraud has caused due to breach in third-party systems, the time taken by you to report the delinquency would have implications.
It will have a direct impact on the extent of your liability in the whole transaction. The higher the delay in intimation from your end, the higher would be your liability.
The structure of customer’s liability is given in the following table:
In an era of widespread online frauds, you need to be aware of the risks involved in e-banking transactions. It becomes important to conduct transactions on safer online platforms. Moreover, you should know your rights and obligations as a customer. In the event of a fraud, intimate your home branch timely to limit the severity of loss and your liability as well.