There are an estimated five crore credit cards and an average of about 2,000 frauds are reported every month. In addition, there are close to 30 crore debit cards. To prevent the card frauds, which are mostly perpetuated by impersonation through stolen, lost and hacked cards, the RBI has suggested a number of steps to be implemented by the banks. The banks are asking merchants to verify the identity of the card holders through photo identity proofs like PAN card, passport or voter ID cards.
ICICI Bank has communicated to its customers that “photo identity proof might be required at merchant outlets for high-value card transactions.” A number of other banks have also informed the customers as also the merchants about the additional identity verification mechanism to prevent frauds.
The issue of card fraud has even reached Parliament. InFebruary, the government informed the Lok Sabha that ICICI Bank reported more than 8,000 cases of credit card fraud worth over Rs 11 crore to the RBI between April and December 2008. Besides, HSBC reported close to 2,500 cases of fraud worth about Rs 5 crore during the same period.
The banks have also started sending SMSs to the customers the moment some high-value purchases are made. Even the RBI has taken a note of the surge in frauds, which has come with the growth in card usage. According to the apex bank, the value of credit card transactions increased from Rs 41,361 cr in 2006-07 to Rs 57,958 cr in 2007-08, representing a surge of over 40 pc. Besides, the debit card transactions surged by over 50 pc to Rs 12,521 cr from Rs 8,172 cr during the same period.
“The total value of credit card transactions has more than trebled between 2003-04 and 2007-08. This trend is likely to continue. Since credit card transactions are increasingly prone to fraud, it is critical to stay abreast of the latest developments in this area to combat fraud effectively,” the RBI had said earlier this year.
RBI has said the banks should set up internal control systems to combat frauds and actively participate in fraud prevention committees/task forces which formulate laws to prevent frauds.
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