Zero Liability For Customers in Case of Fraud Online Transactions, Except For Customer Negligence
Twice in the 2 months, Reserve Bank of India (RBI) has taken a proactive approach in dealing with fraud bank transactions via online medium.
On June 1st, RBI had declared that Rs 5000 shall be the maximum liability for consumers in the case of bank transactions fraud. But now, RBI has issued a new notification wherein consumers have been empowered, even more, providing them with an extra safety net in case of bank transactions fraud.
And the news is good for all bank customers but bad for banks.
Zero Liability For Consumer If Bank’s Negligence
RBI has confirmed that if any fraud or unauthorised transactions happens due to bank’s mistake and negligence, then there shall be zero liability of the consumer.
And the most interesting part: It doesn’t matter whether the consumer reports this fraud transaction or not, the bank will have to compensate fully.
RBI has made it clear that this proactive step has been taken due to “the recent surge in customer grievances relating to unauthorised transactions resulting in debits to their accounts/cards.”
Earlier, in the case of any fraud bank transaction, the customer was required to inform the bank within 3 days, for availing zero liability.
In case the fraud or unauthorised transaction has originated in between, that is a third party between the bank and the customer, then also there is zero liability for the customer. But in this case, the customer needs to inform the bank within 3 days.
Rs 25,000 is the maximum liability for the customer, in case of such third party frauds; and if the fraud is reported after 7 days, then the bank will decide the liability. In case the customer is a saving account holder, then Rs 10,000 shall be the maximum liability, even if the matter is reported after 7 days.
But.. Full Liability If Negligence From Customer
At the same time, playing fair, RBI has stated that banks will not bear any losses if the fraud/authorised transaction has happened due to negligence from the customer.
For example, if the customer has himself provided ATM pin or online banking passwords to another person, and then a fraud happens, then it shall be the full responsibility of the customer to bear the losses until he/she informs the bank.
The notification said, “In cases where the loss is due to negligence by a customer, such as where he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorised transaction to the bank,”
Once the bank is informed, then the liability shifts to the bank: Within 10 working days, the bank will be required to credit the amount back, and within 90 days, the issue needs to be resolved.
RBI also issued several guidelines for the banks, in relation to more safety and security for online banking transactions: mandatory SMS alerts; provision to reply to the alert, in the case of banking fraud, limited liability for those customers who haven’t shared their mobile numbers and more.
You can find the entire RBI notification related to banking frauds here.