What Is My Liability In Case of Fraudulent Transactions In My Account

Written by Vidya Kumar

July 12, 2017

Picture

Executive Summary: Recently RBI has made some announcements regarding fraudulent transactions. The customer has to report the fraud within three days else the liability of the bank is limited in case the bank is not responsible for it. If the bank has been a participant to the fraud then it is fully liable. There are some guidelines set on responsibilities of bank and customer regarding to handle such transactions.

The Reserve Bank of India (RBI) made some announcements last week regarding unauthorised or fraudulent transactions. Here is a summary –
Reason for Unauthorised Transaction
Liability of Customer
Reporting/Notification
Contributory fraud, negligence or deficiency on the part of the bank.
Zero liability
It does not matter whether the transaction is reported or not by the customer.
Neither customer nor bank is responsible for the unauthorized transaction. A third party is responsible.
Zero liability
Customer notifies the bank within three working days of receiving communication from the bank regarding the unauthorised transaction.
Neither customer nor bank is responsible for the unauthorized transaction. A third party is responsible.
Limited to the transaction value or the amount mentioned by the RBI, whichever is lower for each transaction.
Rs 5,000 for Basic Savings Bank Deposits (BSBD), SB accounts, pre-paid payment instruments, gift cards and for current/ cash credit/ overdraft accounts of MSMEs.
Rs. 10,000 for current accounts/ cash credit/ overdraft accounts of individuals with annual average balance (during 365 days preceding the incidence of fraud)/ limit up to Rs. 25,00,000 and credit cards with limit up to Rs 5,00,000.
Rs. 25,000 for all other current/ cash credit/ overdraft accounts and credit cards with limit above Rs 5 lakh.
Customer notifies the bank within four to seven working days of receiving communication from the bank regarding the unauthorised transaction.
Neither customer nor bank is responsible for the unauthorized transaction. A third party is responsible.
Determined as per the bank’s Board approved policy.
The maximum liability of a savings bank account customer will be Rs 10,000 in such cases.

Customer sends notification to bank after seven working days.

There are some guidelines given by RBI too –

  • Banks must provide customers with 24×7 access. There should be multiple channels of communication. Website communication, phone banking, SMS, e-mail, IVR, a dedicated toll-free helpline and reporting to home branch for reporting unauthorised transactions should be available at the least.
  • The communication system used by the bank to send alerts and receive responses must record the time and date of delivery of the message and receipt of customer’s communication.
  • The loss/ fraud reporting system should send an immediate response to the customer to acknowledge the complaint along with a registered complaint number.
  • The burden of proof of customer liability in case of unauthorised electronic banking transactions is with the bank.
  • If the customer does not provide a mobile number to the bank, the bank can refuse to offer the service of electronic transactions to him/her.
  • If the customer has indulged in any negligent activity like sharing payment credentials, he/she will have to bear losses till the transaction is reported to the bank. Losses post reporting will be borne by the bank.
  • The bank should credit the amount in the unauthorised electronic transaction to the customer’s account within 10 working days of reporting of the fraud irrespective of the status of the insurance claim.

0 Comments

INSIGHTS + MONEY STORIES

INSIGHTS + MONEY STORIES

Our Newsletter features money stories and useful insights on personal finance that can help you make informed decisions and stay up-to-date with the latest trends in personal finance. Sign up today!!!

You have Successfully Subscribed!