JOIN USBanks give glib reasons that with crores of customers using cards, a few cases of misuse are inevitable.
A spate of newspaper reports in recent times have spoken of credit card scams, wherein innocent people have stated that some unknown person has used their credit cards for large sums of money and they have been left to bear the brunt of paying the outstanding amount for these fictitious transactions to the banks.
While widespread use of plastic cards for payments are a fact of life and an offshoot of technology offering consumers services at their doorstep and at their convenience, the very occurrence of these scams and the response of banking institutions to their occurrence is cause for worry. Banks often give glib explanations to consumers at large that with crores of customers using cards for payments, a few cases of misuse here and there are inevitable and should be looked upon as collateral damage in a tech-savvy world.
While this may statistically be true, the banks in general and the Reserve Bank of India in particular cannot wish away their responsibility to provide a clean and safe environment in which consumers can use their plastic money. The police, for their own reasons, are also unwilling to register cyber crimes, leaving consumers totally in the lurch.
The key to frauds in electronic banking transactions lies in the fraudster obtaining the password of the consumer by hook or crook. Methods to obtain these vary from phishing e-mails, calls from bank officers offering to improve services on being informed of the customer’s password and ingenious tricks like inserting a metal strip in an ATM to block the card but retain the password and electronic material during a visit for withdrawal of money.
Though consumers may wail later that they were cheated to pass with their vital information unknowingly and the banks are responsible for their consequent losses, the fact remains that the entire system of e-finance runs on efficient usage of technology to make payments instantly and is largely dependant on intelligent usage of the password and other safety features by the consumer himself. Crimes in the system do occur (and are often inevitable) when the volumes are huge, but incorporation of safety features are also part of the duty of the banks in such circumstances.
A few examples can be used to illustrate how financial institutions can reduce credit card scams as and when they occur. If an electronic sale of an airline or rail ticket is based on credit card misuse, the airline or railways can be ordered to disallow the passenger from travelling on the date of travel, as a matter of routine. If goods have been purchased by similar means, the order can be reversed through the receiving bank by reporting the fraud or following the goods to their place of delivery.
In cases where the customer is tricked into feeding his password into an ATM machine which does not dispense cash, banks can be ordered to preserve the CCTV images for the relevant period in which the complaint has been lodged, in an attempt to detect the criminal and bring him to book.
Reluctant banks
Banks are often reluctant to carry out such activities, citing costs, legal hurdles and prolonged procedures to redress such complaints. In a recent incident involving fraudulent encashment of a sum of Rs 7,000 from an ATM being handled by the Consumer Guidance Society of India at Mumbai, in spite of reporting the loss within 15 days, the tendering bank has washed its hands off the incident by stating that “it does not keep CCTV recordings beyond a period of three months’’.
To add salt to the wounds of the gentleman concerned, the Banking Ombudsman for Maharashtra has absolved the bank of its liability by stating that it has “followed due diligence and procedure’’ – not even considering that the bank had no business to erase the concerned recordings when a dispute had been raised. This is clear shirking of responsibility by all concerned.
The RBI seems to have woken up to these issues in recent times. In a new set of guidelines issued a few weeks ago, banks have been told that in all cases where online frauds have taken place, they will have to take the primary responsibility of reimbursing the consumer for the loss he undergoes in such cases. The onus has been put on banks to establish that they have indeed followed good practices in making payments while allowing such fraudulent transactions, and that the ‘customer is right unless proved otherwise’.
Some of the stringent rules include checking the point of sale in allegations of fraud by banks within three days, investigation and settlement of disputes within seven working days and a penalty of Rs 100 per day in case of delays in refunding disputed amounts to consumers within seven days. The ball, as they say, is now in the banks’ court.
(The author is Honorary Secretary of the Consumer Guidance Society of India)