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What to do in case of fraud in bank account?

Today, in the age of the internet, the banking system has become more vulnerable than ever. Although, the banks try to secure their systems with the latest technologies, and the customers on their parts employ the strongest of caution, frauds do happen and people find their bank account debited without their permission. If you are one such customer who has suddenly been enlightened that your bank account has been debited without your permission, then take the corrective actions at the earliest. The sooner you react, the better chances you will have to recover back your money. By keeping a calm mind and having the right knowledge, you can reverse the process, and get back the debited amount into your bank. Read the article further to know how.

Bank Account Fraud

Reserve Bank of India Guideline in the Case of Fraudulent Money Deduction

According to the Reserve Bank of India guideline DBOD.LEG.BC.86 /09.07.007/2001-02, in the case of a fraud where money has been debited without the permission of the account holder, the bank is mandated to return the money back to the customer’s account (up to a specific limit) under the bank approved customer relations policy. Hence, as per this policy, there is no liability on customer’s side in the instance of a fraud and all the liability lies with the bank. The bank is advised to pay back the money when it is at fault, and also when neither the bank nor the customer is at fault, but the fault lies elsewhere in the system.

Things to Do When Your Bank Account Has Been Debited Without Your Permission

As soon as you know that your bank account has been debited without your permission, you need to notify the bank without wasting any time. Remember the longer time you will take to notify the bank, the harder it will be for you or the bank to retrieve back the amount, and the risk of losing the money would be greater. In fact, a delayed notification of the fraud can result in a repeat fraud and you could lose a greater amount of money, hence, it is recommended that you take the corrective measures and notify the bank of the fraud at the earliest. Depending on your bank’s services, you can notify the bank about the fraudulent bank account transfer through website, phone banking, SMS, email, IVR, a dedicated toll-free helpline, or a personal visit to the nearest branch of the bank. The complaint request by the customer would guarantee protective steps by the bank to stop any further unauthorized transaction of funds.

Zero Liability of a Customer

A customer would have zero liability in the case of fraud under the following circumstances.

  • If the bank is found guilty of contributory fraud, negligence, or deficiency, then the customer would benefit from zero liability, irrespective of whether the customer reports the fraud or not.
  •  If there is a third-party breach, where neither the customer nor the bank is at fault but the breach lies elsewhere in the system, and the customer reports the fraud within three working days of receiving the communication from the bank concerning the unauthorized transactions from the customer bank account.

Limited Liability of a Customer

The customer would be liable for the loss occurring due to unauthorized transaction under the following circumstances.

  • In the instance, where the loss is due to the customer’s negligence, like in the case where he has shared the payment details with a third party, the customer would bear the total loss, until a time when the unauthorized transaction has been reported to the bank. If there are further losses even after the complaint to the bank, the subsequent losses would be borne by the bank.
  • In the instance, where the loss is neither due to customer’s negligence nor the bank’s fault, but lies elsewhere in the system, but where the customer delays in notifying the bank (by four to seven working days) of the unauthorized transaction, even after getting information about the same from the bank, the customer would be subjected to the limited liability of the transaction value or the amount mentioned in the table below (whichever is lower)
Account TypeMaximum Liability (in Rupees)
BSBD accounts5,000
All other SBI accounts10,000
Pre-paid payment instruments and gift cards10,000
Credit cards having a limit of 5 lakhs10,000
Current/ Cash Credit/ Overdraft accounts of MSMEs10,000
Current/ Cash Credit/ Overdraft accounts of customers having annual average balance (in the year preceding the fraud) of up to 25 lakhs10,000
Credit cards with limits above 5 lakhs25,000
All other cards/ Cash Cards/ Overdraft accounts25,000
  • In the case where the fault lies neither with the customer nor with the bank but elsewhere in the system, but the customer delays the reporting for more than 7 days, then the liability would be determined according to the bank’s Board approved policy.

Time Frame for Retrieval of Fraudulent Bank Account Debit

  • The banks are mandated to return back the money to the distressed customer’s bank account within ten days of submission of the claim by the customer (having zero liability or limited liability) without waiting for any settlement of the insurance claim. In fact, even if the fraudulent debit is due to customer’s negligence, still, the bank can waive off customer liability at its own discretion.
  • The banks are mandated to resolve the complaint and establish the liability of a customer is not more than ninety days.
  • During this time, there would be no loss of bank account debit, or debit card debit, while in the case of credit card, there would be no added interest on the fraudulent debit.
  • The entire burden of proving customer liability in the instance of unauthorized electronic bank transaction lies with the bank. This means that the customer would have to pay no extra amount to prove his liability.

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