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Harvinder   15 June 2018

Unauthorized transactions on stolen credit card

Dear Members,

I had a Standard Chartered Bank India credit card which got stolen in the United States and five unauthorized transactions totaling to about 5 lacs were made on this card in the US before I could get it blocked. As per RBI guidelines, all the transactions that happen on a stolen credit card before it is reported as stolen to the bank are a liability of the customer only. Based on this, bank has rejected my charge back request. 

But there are issues with the bank's systems because of which all of this happened:

1.       As per RBI's guidelines RBI/2017-18/15, DBR.No.Leg.BC.78/09.07.005/2017-18 – “… Banks shall also enable customers to instantly respond by "Reply" to the SMS and e-mail alerts and the customers should not be required to search for a web page or an e-mail address to notify the objection, if any.”
It clearly states banks shall enable customers to instantly respond by "Reply" to the transaction SMS alerts and e-mail alerts (Standard Chartered never sends an email alert) and the customers should not be required to search for a web page or an e-mail address to notify the objection to the transaction. But, the SMS TRANSACTION ALERTS SENT BY THE BANK DON’T HAVE THE OPTION FOR RAISING AN OBJECTION BY REPLYING TO THE SMS. Since the bank didn't provide this option (AGAINST RBI's GUIDELINES), I couldn't respond instantaneously to report the invalid transactions and the thief was able to make all these five transactions within a short span as I didn’t have a quick channel to inform the bank. Had there been a way to quickly inform the bank via SMS, I could have informed the bank after the very first transaction was made and the rest of the transactions could have been prevented.

2.       As per RBI's guidelines, the bank should have proper fraud prevention mechanisms in place, but in this case no alert was raised even when the transactions were clearly dubious because of following factors:
a.           Transactions were made in the US for first time on this card
b.           Multiple high value transactions were made at multiple stores within a short period (some transactions were even made at the same store)
c.            Entire credit limit of close to 5 lacs was exhausted by these five transactions within minutes but BANK'S FRAUD PREVENTION SYSTEM DIDN’T RAISE A SINGLE ALERT to check if the transactions were authorized by the card owner or not 

3.       All these transactions went through without the need of a PIN, which is a case for all the transaction in the US. Had these required a PIN, the transactions would never have gone through. 

4.       On part of the merchant, the merchant didn't check the identity of the card holder even for such high value transactions

Clearly this has happened because of inability of the bank's systems to authenticate the transaction and carelessness of the merchant to not check the identity of card holder. I had another American card stolen along with this SCB card and it was used at one of the same merchants. I already have got a chargeback for the disputed transaction on that American card. But SCB is not raising a chargeback request with the merchant. 

I have already paid the whole outstanding bill fearing high interest rates and late payment charges. What can be done to get the money back as a big amount is involved here?

Thanks!



Learning

 2 Replies

G.L.N. Prasad (Retired employee.)     15 June 2018

Make this as grievance and issue a Registered notice to the Bank first clarifying your point of view.

Wait for a month, file a complaint in Banking Ombudsman on line, seek personal hearing and explain them your stand.

It is not clear as to whether a Police complaint was lodged to track the criminals and bank accounts.

Harvinder   17 June 2018

Thanks! 

I've already raised a grievance with the bank and am following up with them. A complaint has also been lodged with the US police.


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