Online Payment Frauds- RBI Announces Guidelines to Customers

To protect customers from large financial losses on account of frauds, Reserve Bank of India has capped the customer liability at Rs 25,000 if they report unauthorized transactions within seven working days.

Electronic  payments have become safer for consumers with the Reserve Bank of India (RBI) introducing the concept of 'zero liability' and 'limited liability' for bank customers for any card or online fraud.

RBI said customers can’t be made liable at all if they notify the bank within three working days of the transaction. The central bank's circular covers online transactions as well as face-to-face transactions in stores using electronic payments.

"With the increased thrust of financial inclusion and customer protection and considering the recent surge in customer grievances relating to unauthorized transactions, the customer liability in these circumstances has been reviewed," said the RBI.

Besides asking banks to enable replies to text messages containing transaction alerts, the RBI has asked them to allow reporting of unauthorized transactions on their home page. Also fraud reporting will be possible through other channels including phone banking, sms, email, call centre and interactive voice response.

The customer will also not be liable if there is a third party breach, without bank involvement, which is reported to the bank within three working days of receiving communication regarding the unauthorized transaction.

However, in case of negligence such as sharing payment credentials, customers will have to bear the entire loss until they report the transaction to the bank. Any loss occurring after the reporting shall be borne by the bank.