Credit card lost or stolen? Know when unauthorised transactions become your responsibility

New Delhi: Being on vacations or shopping on weekends may turn stressful if one loses the credit card, even more so if the card holder finds unauthorised transaction being made under it. Such situations demand prompt actions to save the owner from the burden of liability.

It is important to understand where the liability lies based on the circumstances, whether the loss has to be recovered by the cardholder or the bank.

Losing the card does not automatically put the liability on the cardholder. Who bears the cost depends on the time of reporting the incident and how the incident happened.

Imagine you are shopping in a mall and open your purse to take out the card and realise that it is missing. On checking your phone, you see transactions made from the card and report it to the bank within 3 working days. After reporting the lost card, the responsibility for further transactions is borne by the bank. However, for the payments already made, RBI's guidelines and bank policies determine the further action.

In cases of negligence or unauthorised transactions linked in any way to the bank, the customer does not have to pay anything, irrespective of the duration taken to report the theft. The liability lies entirely with the bank.

Zero liability applies to the customer further in case of third-party involvement. In cases where the fault lies neither with the customer nor the bank, the customer does not have to cover the cost of unauthorised transactions, provided that the bank is informed within three working days of receiving notifications from the bank.

However, for the refund to be guaranteed, it is important that there was no negligence on the part of the cardholder. If the customer has shared the credentials with a third party or handed over the card, he/she may have to bear the cost until the bank is notified about the unauthorised transaction.

If the bank is informed within four to seven days from the time the notification from the bank regarding the transaction is received, the liability is limited based on the nature of the account and the caps prescribed by RBI. Beyond seven days, the bank's board-approved policy determines the liability. However, as per RBI's framework, the burden to prove the customer's liability lies with the bank.

The bank must lay out its policies regarding stolen or lost cards while describing where the liability lies and when the customer has to bear the cost. It must be done at the time of opening the account.

As soon as the customer realises the card is missing, the bank must be contacted to block it immediately. It can be done through the bank's mobile application, online banking, or any other helpline number available for customer care. The issuer then has to act accordingly with immediate effect.

Also, it is better for the customer to keep records of unauthorised transactions, the timing of the complaint made, and the bank's response.

In case the bank does not promptly act, the customer has the provision to approach the RBI Ombudsman.

The bank has 90 days to resolve the complaint and prove the customer's liability, if any; otherwise, compensation is provided as per RBI's guidelines.