The number of credit card holders
who have become victims of cyber frauds has risen exponentially. In the recent
past, electronic payment systems have become vulnerable to new types of misuse.
The Reserve Bank of India (RBI) in February asked banks to put in place certain
security and risk measures. The apex bank released new guidelines to make
payment through credit or debit card more secure. According to RBI data, the number
of credit card frauds rose to 1,590 in the quarter ended 31 December amounting
to Rs.9.49 crore compared with 1,327 cases
amounting to Rs.4.93 crore in the preceding three
months.
Here
are the five things that you need to ask your banker before accepting the card
that they offer.
Zero-liability policy
Most banks offer zero-liability
policy on credit cards. However, the cover will vary from bank to bank. “We’ve
zero liability for credit cards. Any fraudulent transaction after reporting
loss of card will be covered. Customers need to inform immediately on the loss
of card,” says Rajesh Kumar, senior executive vice-president, retail credit and
risk, HDFC Bank Ltd. Once you know that you will get zero-liability, ask if it
is covered for stolen card or any kind of fraudulent activity. “In the US and
most of the markets, zero-liability is mandated by the regulator. In India,
though zero-liability is provided but still all facilities are not available as
nobody is ready to pay a fee,” says Nayak. Ascertain the number and amount of
fraudulent transactions covered. Some banks cover transactions within five days
prior to reporting whereas some do for three days. Some banks cover unlimited
amount of transaction while others have a cap of Rs.10,000.
A few banks ask you to pay the first Rs.5,000 lost
and the rest is covered by them. So, there are multiple schemes available. The
process of claim also varies from bank to bank. In case of any loss or fraud,
your bank may ask you to give it in writing that you haven’t done it. Some may
record your phone call.
Chip-based card
RBI has asked all banks to provide chip-based cards if the
card is used in a foreign land at least once. “Chip-based card is more
secure as it is difficult to copy data from it compared with a magnetic-strip
card,” says A.P. Hota, managing director and chief executive officer, National
Payments Corp. of India. This is true only for swipe purchase and not when you
purchase online. However, there have been reports that chip-based cards also
have been compromised. “This happens when the terminal set at a merchant outlet
can read only magnetic-stripe cards (chip-based cards do have magnetic strip as
of now). The terminal will use the magnetic strip to read the card. Now in case
a fraudulent activity happens, the liability will fall on the bank through whose
terminal the activity happened. So customer or the chip-based issuing bank is
protected,” says Nayak.
As you have taken protection by
opting for a chip-based card, the liability of fraudulent activity will not
fall on you.
Factors of authentication
RBI has stated that banks should
move towards a system that facilitates implementation of additional factor of
authentication for cards. Multi-factor authentication is considered to be safer
as the bank will also send a one-time password to your mobile phone and you can
transact only if you key in the code that has been sent to you. However, some
banks still don’t have this. For instance, HDFC Bank Ltd does not offer
multi-factor authentication on all cards. Citibank gives you an option of
multi-factor authentication or do a direct transaction. Axis Bank Ltd has put
in place multi-factor authentication.
Blocking the card
In
case of loss of card or fraudulent activity, the first thing that you should do
is to block the card. All banks that offer credit cards provide the facility to
block the card by calling the customer care helpline. But what happens if you
are abroad or unable to contact the customer care? “HDFC credit card can be
blocked through Internet banking. You can anyway call the customer care too,”
says Kumar. RBI has stated that banks should provide easier methods such as
text message to the customer for blocking card and get a confirmation to that
effect after blocking the card.
Suspicious transaction
RBI has also asked banks to frame
rules based on the transaction pattern of the usage of cards by the customers
in coordination with the authorized card payment networks for preventing fraud. Simply put,
in case a bank sees a transaction happening in a geographical region which is
unusual for the customer, they call the customer to validate whether he/she
wants to do the transaction. American Express, based on the customer behaviour,
calls the card user if they find any suspicious behaviour and also for
big-ticket purchases.
Conclusion: There are other facilities such as
buying an insurance policy, temporary credit which bank gives in case of
fraudulent activity and provisional credit in case of dispute.
