Credit card frauds — nobody wants to experience one. However, there is no dearth of charlatans who want to pull one over on you. In the past, I have written many times about how to prevent credit card frauds. But this is an evergreen topic and it never harms to revisit some of the common hygiene practices while using a credit card. In this post, let’s do just that. In addition, we also look at some of the measures RBI has introduced over the years to prevent credit card and payment frauds.
Be Cautious and Follow Good Cyber Hygiene
- Do not share your credit card PIN/CVV with anyone.
- Cover the machine keyboard with your hand while entering your PIN.
- For online transactions, 2 factor authentication is mandatory. CVV verification is followed by OTP verification. Thus, it is important that you also keep your mobile phone safe and prevent unauthorized access.
- Do not install fancy/unreliable apps on your mobile phone. These can compromise your cyber-security.
- Do not transact on public networks.
- Do not click on unsafe links or share confidential information over phone/email.
- Look for a padlock icon or Https in the address bar before doing an online transaction.
- Install a good antivirus on your mobile/desktop/laptop. Scan your device regularly. While this costs money, this can alert you to risky websites and links. After downloading a file, scan it with the antivirus software before opening.
- A bit of paranoia won’t harm you when it comes to online or merchant transactions.
Avoid Using Credit Card on Websites and with Merchants You Don’t Trust
Better use UPI for payments at such places. Its much safer than using a credit card. Additionally, UPI is no longer limited to just debit transactions. Gradually, credit is being offered on UPI rails. So, you can scan a QR code and use your Rupay credit card for UPI payments. RBI recently permitted UPI payments from pre-sanctioned credit lines from banks and ICICI Bank quickly moved to offer such a product.
For a merchant transaction, if the UPI option is not available for some reason (unreliable mobile network connectivity), suggest using tap-and-pay instead of swiping your credit card. With my limited technical knowledge, tap-and-pay is safer than swiping your credit card. Or simply use cash.
Set up Transaction Limits
This feature is my favourite and gives me the greatest amount of comfort. And not many card users may be aware of this feature. The fraudsters are usually a step ahead of users. Hence, it is incredibly difficult to completely rule out a fraudulent transaction. However, with this feature, you can not only reduce the chances of fraud but also soften the blow if you were to be duped.
How to use this feature? Very simple.
- You can adjust your credit/spending limit on your credit card on a real-time basis. So, your credit card limit may be Rs 3 lacs. But you can cap your spending to say Rs 25,000. With this cap, your bank won’t permit your overall spend on card in a credit cycle to exceed Rs 25,000. Hence, nobody can fleece more than Rs 25,000 from your card account.
- You can set up transaction and daily limits for various types of transactions. There are 2 sub-classifications.
- Domestic/International: If you don’t foresee using your credit card abroad or on foreign websites in the near future, you can simply disable international transactions on your credit card.
- Within Domestic/international transactions, you can set up transaction limits for the following 4 types of transactions. You can even disable a particular type of transaction on your credit card.
- ATM Withdrawal
- Tap-and-Pay
- Online
- Merchant/Physical
Different banks may allow you to configure these limits in a slightly different way. Find out and set up transaction limits as per your usage.
You can set/adjust all the above limits instantly from the bank mobile app or bank website. This is very helpful. For instance, you may have capped your online transaction limit at Rs 5,000. You need to make a purchase for Rs 20,000. You can open the banking app, increase the limit temporarily to Rs 20,000, finish the transaction, and reset the limit back to Rs 5,000.
You can use this feature in many smart ways. For instance, if you have two credit cards, you can use one card exclusively for merchant/physical transactions while you can use the other card exclusively for online transactions.
For the card you use for merchant/physical transactions, you can disable online transactions and ATM transactions.
For the card, you use for online transactions, you can disable merchant and tap-and-pay transactions.
The fraudster won’t be aware of these limits. Hence, if a transaction breaches a limit, it would be declined by the bank, and you will receive a notification SMS/email from the bank about the failed transaction. This will alert you to a potential fraud and you can call your bank to block the card.
If You Have Been Defrauded, Reach out to Your Bank ASAP
The sooner you reach out to your bank, the lower will be your financial liability in case of a fraud.
If you report the fraudulent transaction to the bank within 3 days, then your financial liability is zero. This is applicable for cases where you are not responsible for the unauthorized transaction. While I understand it is not easy to prove that you are not responsible for the said fraudulent transaction, you must still know your rights.
There is no way to ensure that you won’t be a victim of a fraudulent transaction. The fraudsters keep inventing ways to dupe people of their hard-earned money. However, a bit of alertness, awareness about technology features and consumer rights can reduce not just the chances of fraud but also your financial liability in case you become a victim of financial fraud.