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How to Deal with Credit/ATM/Debit Card Fraud?

Debit, ATM or credit card frauds have increased with an increase in online banking transactions. It has become important to know how to deal with debit, credit and ATM card frauds in India.
Written by:
Shivi Gupta
Published on
24-Jul-18

The government is pressing on a cashless and digital India, with numerous online and electronic modes of making payments and transferring money. Using an ATM card or debit card is a convenient way of banking, as all transactions can be made with just a swipe! 

However, convenience comes at a cost! With an increase in plastic money transactions, the risk of crimes associated with it has also increased, especially credit, debit or ATM fraud. 

What are Debit, Credit or ATM Frauds?

Debit, credit or ATM card fraud is a type of  banking crime  which occurs when an unauthorised access is made to your account or unauthorised transactions have been made through your card. This happens when a criminal gains access to your debit, ATM or credit card number and in some cases the PIN, to make unauthorized purchases or withdraw cash from your account.

Types of Debit, ATM or Credit Card Fraud

New technology gives rise to new ideas. There are many types of credit card fraud and they change with the change in technology. The types of credit card fraud include:

1. Card-not-present (CNP) frauds: 

This is the most common credit card fraud. It occurs when the cardholder’s information is stolen and used in an unauthorised manner, without the actual presence of the card. This credit card fraud usually takes place online, and may also be the result of ‘phishing’. Phishing occurs when a fraudster sends a mail generating a link from a fraudulent domain which appears to originate from the bank.

2. Card-present-frauds: 

This credit card fraud is not very common. It includes skimming, where a dishonest seller swipes a consumer’s credit card into a device that stores the information to misuse it later. Once that data is stored, it is used to make transactions and the consumer’s account is charged.

3. Skimming and Card Cloning: 

Card cloning is a trick used to install an ATM card reader in the slot where it is swiped. The card reader extracts all the information with help of a magnetic strip attached to the cards. A hacker transfers this information to a clone card.

In some cases, there is also a fake keypad installed above the actual keypad. Once the PIN is entered, the machine does not respond and the user believes that the ATM machine is not functioning properly. However, the fake keypad copies the PIN entered by the user. 

4. Data theft:

Data theft  is common where an ATM machine is installed in areas such as malls, shopping complexes, markets etc. A person standing behind the user can create a distraction after the PIN is entered and copy the same. Data theft also takes place at ‘point of sale’ (PoS) terminals such as restaurants, shops and other merchant outlets where payments are made in order to make a purchase. 

How to detect Credit Card fraud?

Detecting a credit card fraud is not difficult. The easiest way to spot credit, debit or ATM card fraud is by keeping a check on online banking transactions. Receiving daily update about card transactions and the bank balance enables the user to track every banking transaction made. Connecting the mobile number with bank account helps to keep a track of all the financial transactions.

How to Report a Credit Card Fraud?

The following can be done to report a credit card fraud:

  1. Once you’re aware of credit card fraud happening, immediately call your bank and get the card blocked. Provide all the details of sum amount debited to the bank and ask for a reference number to keep a track.

  2. Gather all the documents relating to credit card fraud like the bank statement, SMS records from the bank, the reference number of complaint made to the bank, etc.

  3. File a complaint with the cyber cell nearest you. It is better to consult a cyber lawyer to understand the correct legal action to take. (Email us at info@myadvo.in or call us at +919811782573.)

  4. If the credit card fraud took place because of bank’s fault, contact a cyber lawyer and send a legal notice to the bank regarding its liability and ask for an immediate action to be taken.

  5. Maintain a written communication with the bank’s nodal officer for follow-up purposes.

  6. If the bank dismisses your credit card fraud case, hire a cyber lawyer to file a complaint with the Banking Ombudsman within 30 days of receiving a response from the bank.

  7. If you’re not satisfied with the Banking Ombudsman’s decision, you can approach the Appellate Authority to file an appeal. 

  8. If no progress is made in the case, consult a cyber lawyer to file a case in the appropriate court.

Time is of the essence in credit card fraud! The user must promptly report the crime as soon as he gains knowledge of it, else the liability to pay for the unauthorised transactions shifts to the user. The Reserve Bank of India has laid down certain guidelines regarding customer's liability in case of credit card frauds.

Customer's Liability in case of Credit Card Fraud

Here’s a table explaining the liability of a cardholder in case of a debit, ATM or credit card fraud:

Time/ Deficiency  Liability 
If the liability is on the part of the bank Zero liability
If there is third-party breach and customer notifies the bank about credit card fraud within 3 working days  Zero liability
If the customer notifies the bank about credit card fraud within 4 to 7 working days Liability limited to the transaction amount or the amount specified by RBI
If the customer notifies the bank about credit card fraud after 7 working days Liability fixed as per the bank’s policy

Maximum liability of a customer in case of Credit Card Fraud

Type of account  Liability 
The basic Savings account Rs. 5000
-All other savings bank accounts  -Prepaid instruments and gift cards  -Current/ Cash Credit/ Overdraft Accounts of MSMEs  -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 lakhs have this as maximum liability  -Credit cards which have a limit up to Rs.5 lakhs Rs. 10,000
All other Current/ Cash Credit/ Overdraft Accounts and credit cards with limit above Rs.5 lakhs Rs. 25,000

Once the bank receives the information about debit, ATM or credit card fraud, it has the responsibility to block the card immediately to prevent any further transactions. If any unauthorised transactions take place after the user informs the bank about the credit card fraud, the user cannot be held liable to pay any amount transacted later.

The bank has the liability to prove that the negligence was on part of the user and not on part of the bank or any other person. If the card user notifies the bank within 3 working days about the credit card fraud, the bank must credit the amount within 10 working days., if there is a delay then RBI guidelines on maximum liability will apply.

Tips to perform Credit Card Transactions Safely!

  • Change your PIN and passwords regularly.

  • Use different passwords for different accounts and do not keep all the money in one account.

  • Avoid using public computers and public WIFI for mobile banking and net banking transactions.

  • Perform  online transactions  with reputed merchants.

  • Do not provide your PIN, password, OTP number or CVV to anyone on a phone call, email, SMS or any other mode as the banks never ask for such details from their customers.

Prevention is better than cure! It is important for debit, ATM or credit card user to be extremely cautious when using the card and performing online transactions with it. It is also imperative to take immediate action in case of credit card fraud, inform the bank and file a cyber crime complaint immediately! To know more, talk to the  best cyber crime lawyer in India  through MyAdvo MyAdvo.