Wednesday, December 15, 2004

Just FYI, for those who own credit cards!

I asked my friend, who works for HSBC, about credit card fraud, customer responsibility, bank liability, etc, and here's what he had to say. (I'm giving it verbatim from his email... I'm not about to take any chances with 'kolarufying' any explanation I might try on my own! Goofy)

So here goes:
"In terms of fraud transactions, yes you are always safe/covered, because the moment you dispute the transaction the onus is always on the other party (i.e. in this case the acquiring bank - the one who collects the transaction from the merchant - and in turn the merchant to prove that you actually carried out the transaction) to prove that it is genuine. Only hassle is your bank (called the issuing bank in tech jargon) may reissue you with a new piece of plastic to avoid further misuse of your old which in turn is a hassle since you have to change card numbers, pins, wait for the period before you get a new one, monitor your statements for a while carefully etc.

Oh and this is the same doesnt matter whether you are in India or the UK.

About the lost card, you are right that the liability shift kicks in the moment you report the loss to the bank. ( Shift from you to the bank i.e.) Until then you are responsible, its no different from someone misusing a signed cheque due to your negligence. Obviously with a card there are more measures like fraud prevention,many security measures to mitigate this risk.

Also, most banks offer insurance as part of their vanilla product. This will help you to cover fraud transactions (on a lost/stolen card) to a certain amount. But these days, most banks make you pay separately for this (Just like care and mortgage insurances) and the terms & conditions of what is/isnt covered are in the very fine print!!!!

And that's how it is... I guess reading the very fine print is always a good idea!


ABCD said...

Still 0 comments as yet!!! And it wuz posted about a week ago!! Talk about drunken shantas and ppl will pitch in with commentsh... nobody caresh abt plashtic peashes of ready money do dey?
Erm... well financial stuff aint my cuppa... so excuse me if i haven't gone thru the salient features of this post....
But it seems ironical that people give so much power to lil' pieces of plastic

hari said...

Hi Shyam,
I was out of station so could not comment on your blog.

First regarding your comment on your doodle on this post - “I jes' thought I'd post the info b'cos somebody thought that there's no fraud cover for credit cardholders in India. I was being HELPFUL! Or trying to.”.

I remember it was me who made this comment and I still stand by it very much.

Being a quasi-legal professional, there is one thing I would like to tell you. What your friend just told you is part of a rule in the conditions applicable to Credit Card holders, as prescribed by HSBC. But rules to be enforceable should be backed up by a law and to be more precise it should be backed by a stringently enforced law. I am not aware of such a stringently enforced law in India as of now.

For example there is a prescribed rule or formula available with the world’s premier Carbonated drinks manufacturers for the limits of bacteria and enzymes in the water used by them. There is a stringent law in force in USA to enforce this rule or formula whereby a violation of the same becomes punishable. But such a law was not available in India. So the Indian consumers could not compel enforcement of the said rules or formula.

Shyam, internationally it is the evasion of law that is punishable and not avoidance of law and since the line of division between the two is too thin to be defined, especially in Indian conditions, most of these banks avail the benefit of doubt and flourish.

But anyway, thank you very much for the efforts you have put in this regard. It has educated us that a rule is in place, only we have to fight to put in a law to enforce the same.

Shyam said...

Hi Aswin, Thanks for taking the time out to leave a comment :) Very, very nice of you! Financial stuff aint my cuppa either, and I think credit cards are overrated. Especially when they can be hacked so easily! I prefer to use cash, at least that way whatever I buy is my own straightaway... not something for which I've to pay over the next few months!

Shyam said...

Dear Hari, Wow, that comment was a whole post in itself, it should really have been on your blog! Thank you very much indeed for the details you gave... they were more helpful and informative than anything I posted, to tell the truth. As for laws in India... is ANY law ever operated stringently enough to punish the rich and powerful? I think the answer to that is, unfortunately, "no".

Curry Lover said...

There are laws about credit cards in the US too. As long as we satisfy certain simple conditions (which I forget), our liability is limited to $50 per lost/stolen card. Most banks waive that for competitive reasons.

I do not like "Visa" ATM cards, though, as the thief can just draw from my checking account, which is usually not very well-stocked...