Understanding Credit Card Fraud: Your Legal Rights as a Consumer 

Credit card fraud has become an alarming issue in India, with the increasing digitisation of financial transactions. The rapid adoption of online shopping, mobile payments, and contactless transactions has made financial transactions more convenient but has also exposed consumers to greater risks of fraud. If you have ever been a victim of credit card fraud or are concerned about the possibility, it is crucial to understand your legal rights as a consumer in India.

This article provides a detailed understanding of credit card fraud, the types of frauds that exist, consumer rights under Indian law, and the necessary steps to take if you become a victim.

What is Credit Card Fraud?

Credit card fraud occurs when an unauthorised individual gains access to your credit card information and makes transactions without your permission. Fraudsters use various tactics to deceive credit card holders, steal their personal details, and exploit financial loopholes.

Common Types of Credit Card Fraud in India

Credit card fraud can take multiple forms, with fraudsters constantly developing new ways to defraud consumers. Some of the most common types include:

Card Skimming

Card skimming happens when fraudsters use a small device called a skimmer to copy credit card details from the magnetic stripe when you swipe your card at an ATM or a point-of-sale (POS) terminal. These details are later used to create a duplicate card.

Phishing and Vishing

• Phishing: Fraudsters send fake emails or messages pretending to be from a bank or a financial institution, tricking users into revealing their credit card details.
• Vishing: This involves fraudsters calling you while pretending to be from your bank’s customer service and asking for sensitive information like CVV, OTP, or PIN.

SIM Swap Fraud

In SIM swap fraud, fraudsters obtain a duplicate SIM card by convincing mobile network operators that they are the real cardholder. Once they have the new SIM, they receive OTPs and other sensitive banking messages, allowing them to access credit card-linked accounts.

Online Fraud

Fraudsters create fake websites and apps that resemble legitimate ones, tricking users into entering their credit card details while making payments. Another method is the use of malware that captures keystrokes when users type in their card details.

Lost or Stolen Credit Card Fraud

If your credit card is lost or stolen, criminals may use it to make unauthorised transactions before you can report and block the card.

Data Breaches

Hackers sometimes breach company databases and steal bulk credit card information, which is then sold on the dark web. Cybercriminals use this data to carry out large-scale fraudulent transactions.

Legal Rights of Consumers in Case of Credit Card Fraud

As an Indian consumer, you are protected by various laws and regulations that help you deal with credit card fraud. Here are your key legal rights:

Reserve Bank of India (RBI) Guidelines on Fraudulent Transactions

The RBI’s guidelines on electronic banking transactions provide consumers with protection against fraudulent credit card transactions. According to the guidelines:

• Zero Liability for Unauthorised Transactions: If the fraud occurs due to negligence or failure of the bank (e.g., security breach, system error), the consumer has zero liability and will get a full refund.
• Limited Liability: If the fraud occurs due to the consumer’s negligence (e.g., sharing OTP, PIN), the liability is limited to a maximum cap set by RBI.
• Reporting Within 3 Days: If a consumer reports fraud within three days, the bank must compensate the full amount within 10 days.
• Delayed Reporting (4-7 Days): The consumer’s liability will be limited as per the bank’s policy, but a partial refund may be provided.
• Beyond 7 Days: The liability will be determined as per the bank’s internal policies.

Consumer Protection Act, 2019

The Consumer Protection Act, 2019 empowers consumers against unfair trade practices and fraudulent transactions. Under this law:

• Consumers can file complaints against fraudulent credit card transactions.
• They can seek compensation for financial losses and mental distress.
• Banks and financial institutions can be held accountable for their security measures.

Information Technology (IT) Act, 2000

The IT Act, 2000 is India’s primary law to tackle cybercrime, including credit card fraud. Key provisions include:

• Section 43: Imposes penalties for unauthorised access to a computer system (used in online frauds).
• Section 66C: Criminalises identity theft, including the misuse of credit card details.
• Section 66D: Covers cheating by impersonation using computer resources (e.g., phishing and vishing frauds).
• Punishment: Fraudsters caught under these sections can face imprisonment for up to 3 years and hefty fines.

Indian Penal Code (IPC)

The IPC also covers credit card fraud under different sections:

• Section 415 & 420: Cheating and dishonestly inducing delivery of property.
• Section 379: Theft (for stolen credit cards).
• Section 406: Criminal breach of trust.

If fraudsters are caught, they can be sentenced to imprisonment and heavy fines.

What to Do If You Are a Victim of Credit Card Fraud?

If you suspect fraudulent activity on your credit card, take the following steps immediately:

Report to Your Bank

• Call your bank’s customer care number and report the fraudulent transaction.
• Request the bank to block your credit card immediately to prevent further unauthorised usage.
• Most banks have a 24/7 helpline for reporting fraud.

File a Complaint with the Cybercrime Portal

• Visit India’s cybercrime portal (https://cybercrime.gov.in/) and file an online complaint under the “Financial Fraud” category.
• You can also report the incident to your nearest Cyber Crime Police Station.

Lodge a Police FIR

If the fraud involves significant financial loss, visit the nearest police station and file a First Information Report (FIR). In case the police refuse to file an FIR, you can escalate the matter to the Superintendent of Police or approach the Cyber Cell.

Notify the Credit Bureau

Contact credit bureaus such as CIBIL, Experian, Equifax, or CRIF High Mark to update your credit record and prevent your credit score from being affected by unauthorised transactions.

Monitor Your Credit Card Statements

Regularly check your credit card statements for unusual transactions. Set up SMS and email alerts to track every transaction made using your credit card.

How to Prevent Credit Card Fraud?

While legal protections exist, prevention is always better than cure. Here are some proactive steps to safeguard your credit card:

• Enable Two-Factor Authentication: Ensure that your credit card transactions require an OTP (One-Time Password) for approval.
• Avoid Public Wi-Fi for Transactions: Never enter credit card details on banking sites while using public Wi-Fi networks.
• Beware of Phishing Scams: Do not click on suspicious links or share your credit card details over email, phone, or SMS.
• Keep Your Card Details Secure: Avoid storing card details on websites or mobile applications. Do not write down your PIN or CVV anywhere.
• Use Virtual Credit Cards: Some banks offer virtual credit cards that generate temporary card numbers for online transactions.
• Regularly Update Your Contact Details: Ensure your bank has your latest mobile number and email so that you receive transaction alerts in real-time.

Conclusion

Credit card fraud is a growing concern in India, but consumers have strong legal protections under RBI guidelines, the Consumer Protection Act, the IT Act, and the IPC. If you ever become a victim, act swiftly by reporting the fraud to your bank, filing a complaint with the Cyber Crime Cell, and taking preventive measures to secure your financial information.

By staying informed and vigilant, you can protect yourself from credit card fraud and ensure a safer digital banking experience.