RBI hints at “Zero Liability” for Indian Credit Card Customers
Peace of mind is what Indians prefer – a majority of the Indian consumers are wary of using technology-enabled banking services such as accessing online banking, mobile banking, utilizing ATMs or carrying out even basic credit card transactions.
Even today, banking customers fear losing money to fraudulent instances such as fishing and unauthorized transactions while dealing with point of sales online banking services and credit card products respectively, due to lack of total protection policy to shield them from loss in electronic transactions.
To deal with this distress sign, the banking regulator RBI has alluded the industry to promote ‘zero liability’ policy for lost or stolen credit cards, to protect consumer from liability arising out of fraudulent use of his card.
In India, credit card issuers have provision in their contracts with the customers that the company is not liable for the fraud unless the customer reports the loss immediately. In short, the onus of liability shifts to the card issuer only after the intimation from the customer to the financial institution about the mishap.
On the other hand, in places where the zero liability policy is already implemented, for example, the US – the card issuing institution won’t hold you responsible for unauthorized purchases made through the store, over the telephone or made online.
In fact, over there, you are provided ample time to review your monthly statement to get hold of the unauthorized transaction; only to get it provisionally credited, at a later period, for losses from unauthorized card use.
However, in order to access this safety net, they need to meet few diligently-driven preconditions such as the account being operated in good standing; you have exercised reasonable care in safeguarding your card from any unauthorized use; and you have not reported two or more unauthorized events during the year.
In India too we need a similar system to support the case of aggrieved customers, in which case the transactions cannot be held valid unless they are not authorized by the customers. Moreover, the stranded customers often have limited investigative know-how to prove that the transaction was not performed by them.
Hat’s off to the RBI for this pro-customer thinking !