Financial Fraud: RBI Guidelines For Unauthorised Transactions

Online banking is an inevitable mode of payment in this world of advanced technology. With the advancement of Artificial Technology, human efforts are reduced, granting more and more convenience to people. However, such technological convenience holds huge risks as well for the customers. Know in detail what the RBI guidelines for unauthorised transactions lay in favour of bank users.

While mobile phones have replaced many other gadgets, it has also become a wallet lately. Using online modes of payment are quite common these days. Even credit cards, debit cards, etc. need not be carried while people can make payments directly using mobile applications. This also requires app permissions which eventually brings the risk of hackers. There are two sides to every coin, so do online transactions. While a person does not need to carry cash everywhere, money in banks is also not so safe. The threat of unauthorised transactions has only increased recently. The Reserve Bank of India (RBI) being the regulatory authority at the central level constantly keeps an eye on financial safety through RBI guidelines for online transactions. Prioritising limiting the liability of customers, RBI holds banks responsible in case of bank fraud complaints. The basic idea is to provide customers with all the safety means to promote the use of online transactions. 

What Does Unauthorised Transaction on Credit Card Mean?

When you are enjoying your Sunday while staying back at home and preparing for the next day’s run to work, you receive a text message depicting a debit of Rs 1 lakh from your bank account. Suddenly the sky seems to be falling because you are not the one who made any purchase or withdrew any money from your account. No kin is using your credit or debit card with your permission either. This is what you call an unauthorised transaction. Some people stress more assuming that their bank won’t refund unauthorised transactions. It is recommended to know RBI guidelines for online transactions and lodge online FIR for fraudulent transactions without delay. 

Can Banks Refund Unauthorised Transactions?

Earlier, the laws in India did not include limiting the liability of customers in case of financial fraud. However, an unprecedented hike in unauthorised transaction complaint and financial frauds have come to light in recent years. To address the same, RBI guidelines for unauthorised transactions keep revising from time to time. The latest RBI guidelines for UPI frauds in banks, unauthorised transactions on credit card and debit cards, and other online modes require banks to refund the amount. For that purpose, an unauthorised transaction complaint has to be reported without delay. While availing electronic payment services, banks have been instructed to register the customer’s contact number (email ID as well) so that each and every transaction alert is communicated to that number. In that case, it is easy for customers to notice and report unauthorised transaction complaints and refunds can be initiated accordingly. 

However, delays in reporting and also participation in the commitment of online financial frauds may affect the limiting liability of customers as per RBI. Once the matter is proven to fall under an unauthorised transaction complaint, banks have to process the refund within 10 days. The complaint also needs to be resolved within 90 days as per RBI guidelines for disputed transactions. If the officials comment that the bank won't refund unauthorised transactions since details were disclosed by the customer for which no cyber complaint was lodged, a cyber crimes lawyer may help clear the further path.

Limiting Liability of Customers: RBI on Unauthorised Transactions

RBI guidelines for unauthorised transactions provide limited liability to customers in case of unauthorised transaction complaints. There are some guidelines regarding bank fraud complaints that require customers not to disclose private information like an OTP, CVV, etc., and report the unauthorised transaction on the credit card or any other online mode without delay. If an unauthorised transaction complaint is received within 24 hours and there is no negligence on the part of the customer, a 100% refund is provided. However, if it is the customer’s negligence that resulted in unauthorised transactions, the customer has to bear all loss till the matter is reported to the concerned bank. Once the banker comes to know about bank fraud complaints, any further unauthorised transaction has to be borne by the bank only. Click here for official RBI guidelines in this regard.

RBI Guidelines for Unauthorised Transactions

If neither the bank nor the customer is at fault and a third-party breach led to an unauthorised transaction complaint, the following rule applies for a refund:

• Within 3 Days - As per RBI guidelines for disputed transactions, if the customer reports bank fraud transactions within 3 days, he/ she will have to bear zero liability. The whole amount will be refunded to the account by the concerned bank. 
• Within 4-7 Days - Limiting liability of customers, RBI guidelines require customers to bear with the transaction amount or an amount within Rs 5000 up to Rs 25,000, whichever is lower in case the unauthorised transaction complaint is made after 3 days and before 7 days. 
• After 7 Days - The bank won't refund unauthorised transactions after the expiry of 7 days if the policy does not allow it.

If the customer is at fault for sharing the credentials with an unauthorised person, he/ she will have to bear the losses until reported to the concerned banker. Once the bank fraud complaints are registered with the concerned bank and another unauthorised transaction takes place thereafter, the same has to be borne by the bank as per RBI guidelines for unauthorised transactions. 

Also, if financial fraud takes place due to contributory fraud or negligence of the bank, the customer enjoys zero liability regardless of whether or not the unauthorised transaction complaint is lodged with the bank. Things can be clarified through expert opinion via banking lawyers. 

Documents Required for Unauthorised Transaction Complaint

• Bank Account Statement
• Address Proof of Account Owner 
• Identity Proof
• Xerox copies of unauthorised transaction snapshots
• Online FIR for fraud transaction at Cyber Crime website
• A written complaint containing complete details of the unauthorised transaction on the credit card or other mode

RBI Unauthorized Transaction Complaint

After lodging a complaint with your bank regarding an unauthorized transaction without satisfactory resolution, or if your bank is not willing to help, you can escalate the matter to the Reserve Bank of India (RBI). To do this, you should visit the RBI website and locate their grievance redressal portal, or you can click here. Here, you can file a formal complaint against the bank, providing details of the unauthorized transaction, the complaint lodged with the bank, and any correspondence with the bank regarding the matter. It is important to attach all relevant documents, such as transaction details, complaint acknowledgment from the bank, and any other supporting evidence. The RBI will review your complaint and take appropriate action to ensure the bank adheres to RBI guidelines for handling unauthorized transactions. This escalation is crucial if the bank has failed to resolve your complaint within a reasonable time frame or has denied your claim without valid reasons.

How do I get my Money Back from Unauthorised Transactions?

One should make sure to keep all physical financial items like credit/ debit cards safe so that they do not reach a third party. Also make sure not to disclose important credentials like an OTP, or CVV to others, not even to bank officials. As per the RBI guidelines for unauthorised transactions, it is pertinent for customers to report fraudulent transactions without any delay. It does not matter much whether the bank fraud complaint involves negligence on the part of the customer, as soon as the same is reported to the bank, things are much under control. It is also not necessary that if OTP or other credentials are shared and financial fraud takes place, the customer will surely have to bear the losses since it depends upon the bank policy whether the customer will bear complete liability. 

RBI Guidelines for Frauds In Banks

Definition of Fraud: RBI defines fraud as any deliberate act of omission or commission by any person, carried out in the course of banking transactions or in the books of accounts, resulting in wrongful gain to any person and wrongful loss to the bank.

Classification of Frauds: Frauds are classified into major and minor based on the amount involved and other criteria. Major frauds involve amounts of ₹1 lakh and above and must be reported to RBI's Central Fraud Monitoring Cell (CFMC).

Reporting to RBI: Banks must report all fraud cases involving ₹1 lakh and above to RBI's CFMC through the Fraud Reporting System (FRS) portal within prescribed time frames.

Responsibility of Banks: Banks are responsible for the prevention, detection, and reporting of frauds. They must have robust systems and procedures in place to manage and mitigate fraud risks.

Investigation and Recovery: Banks are required to promptly investigate reported frauds, take appropriate recovery actions, and ensure coordination with law enforcement agencies for criminal prosecution, if necessary.

Customer Liability: Customers are not liable for losses arising out of fraud if they report the unauthorized transaction within 3 working days from the date of receipt of communication about the transaction. The customer's liability is zero in such cases. If you register your complaint after 3 days and between 7 days of the fraudulent transaction, then you will have to bear the limited liability of INR 5,000 to INR 25,000, whichever is lower. After deducting the lowest amount, the rest of it will be returned to you.vIf you fail to report such unauthorised transactions within 7 days, the bank will not be liable to refund any amount to you.

Penalties and Consequences: Banks failing to adhere to RBI's guidelines on fraud prevention and detection may face penalties, including fines and restrictions on banking operations. Repeat offenders may face severe regulatory actions.

Monitoring and Reporting: RBI monitors fraud trends in banks and issues periodic guidelines and advisories to strengthen fraud prevention measures. Banks are required to submit reports on frauds detected and actions taken to RBI.

Customer Awareness and Education: Banks are required to educate customers about various types of frauds, preventive measures, and the importance of promptly reporting any suspicious transactions.

Grievance Redressal: Customers can escalate complaints related to frauds to RBI's Banking Ombudsman or lodge a complaint directly with RBI through its grievance redressal portal if the bank fails to resolve the issue satisfactorily.

RBI Frauds Complaint

Filing a fraud complaint with the RBI encompasses a broader range of issues compared to an unauthorized transaction complaint. While an unauthorized transaction complaint specifically addresses instances where money is debited from an account without the account holder’s consent, a fraud complaint includes a wider spectrum of fraudulent activities. These can range from phishing attacks, identity theft, forgery, loan frauds, and internal banking frauds to cyber-attacks targeting bank systems. Both types of complaints require prompt reporting to the bank and, if unresolved, can be escalated to the RBI through their grievance redressal portal. The process for escalation involves providing comprehensive details and relevant documentation. However, fraud complaints often require longer and more detailed investigations due to their complexity and the variety of fraudulent methods involved.

Process for Bank Frauds Complaints

• Cyber Complaint - Customers should lodge a cyber complaintwithin 24 hours if an unauthorised transaction through electronic payments took place from their account. It may be taken as an online FIR for a fraud transaction. There should be no delay in reporting to the bank as well. Keep bank acknowledgment and Cyber Cell complaint number safe for further process. 
• Bank Frauds Complaints - The RBI guidelines for unauthorised transactions require customers to inform the bank without any delay and obtain an acknowledgment as well. Online FIR for fraudulent transactions is not enough in such cases to ensure a refund by the bank. 
• Police FIR - If a person loses physical possession of his/ her credit/ debit card and the same has already been used for unauthorised transactions, the cardholder has to report the same to the police. 
• Complaint to RBI - If you have reported a fraud transaction to the concerned bank within the given time frame and they say that the bank won’t refund an unauthorised transaction, you may register a complaint against the bank with RBI.

RBI Guidelines for UPI Frauds in Banks

The RBI guidelines for UPI frauds in banks are designed to address the specific risks associated with real-time digital transactions. Similar to the guidelines for general frauds and unauthorized transactions, these regulations mandate banks to promptly investigate and resolve UPI fraud complaints, ensuring zero liability for customers who report unauthorized transactions within 3 days and some liability in case of reports up to 7 days. Unlike broader fraud guidelines, which cover various fraudulent activities such as loan frauds and phishing, and unauthorized transaction guidelines focusing on unapproved debits, UPI fraud guidelines specifically target the rapid and often small-scale nature of digital frauds. UPI frauds are often done through deception and manipulations based on false representations directly through the victim, instead of hacking, unauthorised access to bank account or credit cards etc. For example, someone calls pretending to sell something and the victim believing to be paying a small advance amount to the seller, himself completes a UPI payment but later discovers everything was a lie.

UPI Frauds Complaints RBI

Complaints regarding UPI fraud to the RBI share similarities with unauthorized transaction complaints, both involving financial losses due to fraudulent activities. However, in UPI frauds, victims often authorise payments themselves without realising they are not paying for what they are being made to believe, potentially making them ineligible for bank or RBI refunds. In such cases, victims should file cybercrime complaints, recognizing the criminal nature of the fraud beyond mere unauthorized transactions.

RBI Cyber Crime Complaint Online

To report frauds and unauthorized transactions for blocking future transactions and refunds, individuals can file complaints through the RBI's cybercrime portal. However, for more intricate cases like UPI frauds, trading scams, or online job offer scams, filing a complaint on the National Cyber Crime Reporting Portal (NCCRP) is necessary. This portal handles complex cases comprehensively, ensuring appropriate investigation and action by law enforcement agencies. Below, are the steps for lodging a cyber crime complaint online.

1. Visit the National Cyber Crime Reporting Portal (NCCRP) website.
2. Choose the “Financial Fraud” option.
3. Click on 'Register a Complaint' or similar option.
4. Fill in personal details and select the appropriate complaint category (e.g., UPI fraud, Debit Card fraud etc.).
5. Provide detailed information about the incident, including dates, amounts involved, and any communication or evidence.
6. Submit any supporting documents or evidence, such as screenshots or transaction records.
7. Review the information provided and submit the complaint.
8. Receive a unique complaint ID for tracking purposes.
9. Follow up with law enforcement authorities as necessary and cooperate with any further investigation.

FAQs

1. Can banks refund Unauthorised transactions?

   Yes, provided there is no negligence on the part of the account holder and such transaction has to be reported to the bank within 24 hours for a 100% refund.
   
   

2. What are the rules for RBI transaction disputes?

   The bank has 90 days from the date of receipt to settle your complaint. If the transaction occurred due to your negligence, such as disclosing your password, PIN, OTP, and so on, you will be responsible for the loss until you notify your bank.
   
   

3. What is the time frame for Unauthorised transaction?

   The customer should report about the unauthorized transaction within 3 working days to have zero liability. The bank has to resolve the complaint for an Unauthorized transaction within 90 days from the date of receipt.
   
   

4. What are the rules for customer liability in RBI?

   The customer's liability based on the time taken to report fraudulent transactions:
   1. Within 3 working days: Zero liability.
   2. Within 4 to 7 working days: Limited liability, capped at the transaction value or the amount specified in this table, whichever is lower.
   3. Beyond 7 working days: Subject to the bank's Board approved policy.
      
      

5. How do I complain to RBI about Unauthorized transactions?

   To report unauthorized transactions, you can directly contact your bank or financial institution's customer service. They will assist you in lodging a complaint and guide you through the resolution process. Additionally, you can file a complaint through the RBI's dedicated complaint portal or contact their helpline for further assistance.
   
   

6. What are the rules for wrong transactions in RBI?

   The RBI has established guidelines and regulations to address wrong transactions. If you've made an erroneous transaction, it's crucial to notify your bank or financial institution immediately. They will initiate an investigation and take appropriate action to rectify the error. The timeframe for resolution may vary depending on the nature of the transaction and the bank's policies.
   
   

7. What are the new transaction rules for RBI?

   The RBI regularly updates its transaction rules and regulations to enhance the security and efficiency of the banking system. These rules may include measures to combat fraud, streamline payment processes, and protect consumers' interests. To stay informed about the latest transaction rules, it's advisable to regularly check the RBI's official website or consult with your bank for updates and guidance. In relation to a fraudulent transaction, a banking lawyer or cybercrime expert may be able to help you better, by helping you understand and analyse the rules in more detail and how they may be applicable to your case.