In a bid to limit customer liability in fraudulent credit card, online transactions, the Reserve Bank of India (RBI) has come out with revised guidelines and has also sought to make rules stricter for banks in cases of frauds. “With the increased thrust on financial inclusion and customer protection and considering the recent surge in customer grievances relating to unauthorised transactions resulting in debits to their accounts/ cards, the criteria for determining the customer liability in these circumstances have been reviewed,” the RBI said in a circular on Thursday.
According to the revised guidelines, a customer will have zero liability in respect of a fraudulent transaction if there is contributory fraud or negligence on the part of the bank, irrespective of whether or not the transaction is reported by the customer. In case of a third party breach also, where the deficiency lies neither with the bank nor with the customer and the customer informs the bank within 3 working days of receiving communication from the bank regarding the unauthorised transaction, the customer will not be liable. Similarly, customer liability has been capped at Rs 25,000 if a person reports unauthorised transactions within seven working days. However, a bank is free to determine customer liability if such a transaction is reported after seven working days.
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It is clear, thus, that although customer liability has got limited as per revised guidelines, however, a customer is also liable to some extent in case of negligence on his part. Therefore, if you do not want to suffer at all, then it is also your responsibility to be careful while doing any financial transaction. Here’s what you need to do:
1. The RBI has advised banks to ask their customers to mandatorily register for SMS alerts and wherever available register for e-mail alerts for electronic banking transactions. The SMS alerts shall mandatorily be sent to the customers, while email alerts may be sent, wherever registered. Thus, if you have not still got registered for SMS alert, then it is in your own interest to do so as soon as possible even if your bank takes some time in sending you a request for SMS alert registration. After all, the money is yours and it is also your duty to keep it as safe as possible.
2. A customer will now have zero liability in respect of a fraudulent transaction if there is contributory fraud or negligence on the part of the bank, irrespective of whether or not the transaction is reported by the customer. In case of a third party breach also, where the deficiency lies neither with the bank nor with the customer and the customer notifies the bank within three working days of receiving communication from the bank regarding the unauthorised transaction, the customer will not be liable. Thus, if don’t want to have any liability in respect of a fraudulent transaction, then inform the bank about this as soon as possible. If the bank is closed for some reason, then talk to any customer care officer and lodge your complaint. Don’t forget to get the complaint number. Also write an email to the bank, which will remain as a proof that you acted on time.
3. A customer, however, will now be liable for the loss occurring due to unauthorised transactions in cases where the loss is due to negligence by a customer. For instance, in case he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorised transaction to the bank. Any loss occurring after the reporting of the unauthorised transaction shall be borne by the bank. Here also it is in your own interest to report the matter to the bank as soon as possible. Until that is done, you will have to bear the loss all by yourself.
4. In cases where the responsibility for the unauthorised electronic banking transaction lies neither with the bank nor with the customer, but lies elsewhere in the system and when there is a delay (of four to seven working days after receiving the communication from the bank) on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be limited to the transaction value or the amount notified by the RBI. For instance, in case of credit cards with limit up to Rs 5 lakh, the maximum liability has been fixed at Rs 10,000, and in case of credit cards with limit above Rs 5 lakh, the maximum liability has been fixed at Rs 25,000. Thus, here also reporting the matter to the bank as soon as possible is in your own interest.
5. You need to remember that if the delay in reporting is beyond seven working days, the customer liability shall be determined as per the bank’s Board-approved policy. Banks, however, have been asked to provide the details of their policy in regard to customers’ liability formulated in pursuance of the RBI directions at the time of opening the accounts. Banks will also have to display their approved policy in public domain for wider dissemination. The existing customers will also have to be individually informed about the bank’s policy.
6. The RBI has said that the burden of proving customer liability in case of unauthorised electronic banking transactions shall lie on the bank. However, you also need to be careful while doing any financial transaction so that you are not held liable for the loss occurring due to unauthorised transactions.