Tackling frauds in electronic banking

Recourse is available based on whether the fault lies at their end or with the bank

The thrust on electronic transactions, post-demonetisation, has seen the RBI alerting customers to frauds in such transactions and recourse available to them, through its “Jaankar Baniye, Satark Rahiye” campaign. Electronic transactions can be online, such as internet banking, mobile banking or pre-paid instruments, for which the the payment instrument (card) is not needed. They can also be in the form of ATM or point-of-sale transactions that require the card. Here’s what you should know:

Zero or limited liability

Unfortunately, if you get entangled in a fraudulent electronic transaction, you have zero or no liability in case the negligence or deficiency is on the part of the bank. This is irrespective of whether you report the fraud to the bank or not. You have a right to get back the money you lost entirely, come what may.

However, if the fraud occurred due to your negligence, you will have to bear the entire loss until you report the matter to the bank. Once you report it, the bank must take remedial action immediately. If it doesn’t and the fraud continues, the bank will become liable to compensate you for the loss occurred after reporting the matter to it.

Time is of essence

When there is no deficiency on either your part or on the part of the bank, but the fraud has happened because of a breach elsewhere in the system, the time you take to notify it to the bank becomes crucial in deciding how much of the loss will be made good. In case you report it within three working days, the entire loss will be made good. If you report it within four to seven working days, you will have to bear a maximum of ₹5,000-25,000, depending on the nature of the transaction. The remaining amount will be made good to you.

If there is a delay beyond seven days, what you must bear and what the bank should, will be decided by your bank internally.

Duties of the bank

With the RBI setting strict time-lines and clearly drawing your rights and responsibilities in case of a fraudulent transaction, it helps to know what the duties of the bank, in this regard, are.

As per RBI circular on customer protection issued in July 2017, while email alerts are not mandatory, banks must ask their customers to register for SMS alerts and these alerts are required to be mandatorily sent to them.

Moreover, banks must also enable customers to instantly reply to the SMS and e-mail alerts to notify objections to the transaction immediately.

Besides, a direct link for lodging the complaints, with specific option to report unauthorised electronic transactions, must be provided by banks on the home page of their website.

Also, an immediate/auto response should be sent to the customer, acknowledging the complaint along with the registered complaint number.

Once you inform the bank of the fraud, the bank has a duty to credit the amount involved to your account within ten days.

By all means, the bank should resolve the complaint within 90 days from the date of the receipt.

In case you find that your bank/branch is not adhering to these rules or you have any difficulty in resolving the issue at the level of the individual bank, you can approach the banking ombudsman.

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