Let me start with RBI’s detailed circular of 2017 on consumer protection in case of unauthorised electronic transactions https://m.rbi.org.in/scripts/NotificationUser.aspx?Id=11040. It puts the onus on banks to take any liability arising out of unauthorised credit card transactions if the customer reports the fraud to the bank or if the customer confirms the unauthorised nature of the transaction within 3 days of the bank informing the customer of such transaction. This protects any innocent customer with ‘zero liability’ in case of prompt reporting of unauthorised transactions in his/her account. A wonderful step indeed for customer protection.
I recently had an experience worth narrating regarding my Axis Bank credit card, which I feel gives some insights into 1. The hardships a common banking customer may face when dealing with behemoths like Banks and 2. How, the many customer protection measures a regulator like RBI may require of the Banks, do not get complied with.
On 25/05/2020, I was informed by the bank via email, of a transaction done on my credit card from abroad, and the mail further asked me to reply immediately to them if the said transaction was an unauthorised one. I quickly responded to the bank’s email, that the transaction was unauthorised and the amount should not be billed to me and that I have blocked the card (I had done that from the mobile app). The transaction amount was small. Thereafter, the bank’s relationship manager was in touch with me and assured me that the amount will not be billed to me. But I was in for a surprise when I got the credit card statement billing me for this unauthorised amount and an intimation on sms from the bank after two weeks of the incident, that the above amount has been debited from my account!!
I called up the Bank’s senior official whom I knew personally and who was in the know of the earlier correspondence of the unauthorised transaction. Then I get a mail from another Dept of the bank asking me to fill up and send the 1. Axis bank’s Cardholder dispute form 2. Incident Letter addressed to the bank in Hindi or English, and 3. Police complaint/FIR
What is irksome, customer unfriendly and needs correction: 1. The bank did not have any standard line in their first transactions monitoring email intimation(of 25/05/2020), which could have informed the customer(me) to fill up their Cardholder Dispute Form if the transaction was an unauthorised one. The said form should have been hyperlinked in a mail of such criticality. Thus the unsuspecting customer – who was not informed of the follow through process and has lost money for no fault of his/her – is hassled, 2. The bank already had my email intimation from 2 weeks earlier, regarding the unauthorised transaction in response to their then email. Yet they want another Incident Letter from me. Clearly one department of the bank does not know what another department has been doing with the customer. Thus the customer is hassled, 3. They want me to file a complaint with the police. But what will police do with this complaint which is regarding an unauthorised use of the bank card for a small amount in another country? There will be no FIR – only a stamp of receipt of my complaint in the police station. Why burden the police with this unnecessary step when the amount is small and hassle the customer with this process which anyway has no meaning since the bank is itself already aware of the unauthorised use of the card and has blocked the card because of the same?
On the RBI’s side, there is a very comprehensive circular since 2017, for customer protection in online payments. But does the RBI’s audit process capture the compliance of its instructions to Banks especially regarding processes put in place after such circulars? If not, the banking customers-that is, the ordinary banking customers- are not really protected and the circulars may be remaining on the books as good intent only. Maybe there is a strong need for auditing the compliance in Banks, of RBI circulars, through process checking.
So what are the learnings:1. If Ease of Doing Business is a sincere intent and especially for trust in the banking system to improve, all banking processes at customer (especially the depositors) pain points (like the examples in my case cited above, there will be infinite such issues with various banking services) should be reassessed by the banks and RBI. These pain points can readily be identified in customer complaints and every resolution of customer complaint should result in mandatory process improvement around the pain point. That way the number of complaints will actually decrease over time. 2. The ordinary bank depositor relies on the RBI to protect their legitimate interests. RBI too issues guidance on measures for customer protection by banks. Therefore, as mentioned above, audits from RBI’s side should have process checks on bank’s compliance of its customer protection directions. Otherwise, customers can undergo a harrowing time getting their complaints resolved. 3. Police should not be burdened with unnecessary complaints. There can be a monetary limit, only beyond which complaints should need to be registered with the police. That way the banks will be forced to upgrade their monitoring systems if they do not wish to write off losses in a large number of small unauthorised transactions. 4. Banks could offer a choice of sms alerts to their customers so that there is dual monitoring – that is by the bank as well as the customer- on unauthorised transactions. In my story above, I have not mentioned two more small value unauthorised transactions done in a foreign country on the same date that were not picked up in the bank’s transaction monitoring system, but had been billed to my credit card. Had ‘foreign transactions’ on my card been on sms alert, I would have got intimation of the same instantly and it would have helped stop the further fraudulent transactions.