With both RBI and issuers focussing on card protection at low cost, users will benefit
One safety rule many international travellers follow is blocking and destroying their credit cards after a trip. Judicious travellers know that fraudsters can easily capture the details stored on a card’s magnetic strip and misuse it by making a new one.
Vishal Sood, a techie, followed this ritual after every trip abroad until his card company provided him with a solution. They sent him a card with a chip on it called the EMV. The card details are stored in the chip which makes it difficult to copy the information on the card.
“Earlier, I paid Rs 100 each time I applied for a new card. There was also a waiting period of seven to ten working days before I could get my new card,” says Sood.
HDFC Bank, Citibank and Axis Bank have already begun upgrading their customers to EMV cards. Others like Deutsche Bank will soon introduce the feature.
“We have started providing EMV cards to our platinum card customers and others who travel abroad. This has proven to be more secure than earlier technology,” said Parag Rao, executive vice president at HDFC Bank.
There are a number of other measures that regulator and card companies are using to protect cards against fraud or to free cardholders of liabilities in case of misuse.
| TOOL | FEATURE |
| EMV | Reduces skimming fraud |
| IVR PIN | Reduce misuse for transactions done through phones |
| Behavioural patterns | Card blocked in case of deviations from cardholder’s usual spending pattern. |
| VBV/MCSC | Second layer of security for internet transactions. |
| CPP | *Covers misuse of card for the seven days prior to card being blocked. |
| Built- in insurance | **Cover for losses due to theft, loss of card, skimming or misuse between 12-48 hours prior to the card being blocked. |
| *Two plans with sum insured Rs 50,000 and Rs 1 lakh **Some banks, such as Standard Chartered, keep it optional and may charge for this cover | |
Card Protection Plan (CPP): This is the most popular plan that card companies have resorted to. An independent agency sells this plan through all private and some government issuers in the country. CPP covers customers for liability arising in case of loss or theft of a card.
There are two plans that cover liability, up to Rs 50,000 and Rs 1 lakh. It covers frauds that occur seven days prior to the customer blocking the card. There is no cap on the number of cards a person can register under a single CPP. However, there is a cap on how much cover a single card can get, in case of loss. In the classic plan, the sum insured of Rs 50,000, the cover is Rs 20,000 on each card. In the premium plan, the sum insured is Rs 1 lakh and the cap on each card is Rs 40,000. The insurance does not cover the card holder for online misuse or skimming of cards.
Tracking spending patterns: Credit card companies are studying the customer’s usage pattern. Any deviation in this pattern and the company gets in touch with the customer to verify if the transaction was authentic. For instance, when the accounts of card holders, who usually avoid using their credit card internationally suddenly show such transactions, the issuers immediately call up the customer. The company even takes pre-emptive action in some cases.
“If the customer is not reachable, we immediately block the card,” said a Deutsche Bank’s spokesperson.
Built-in insurance: Many issuers provide cardholders with insurance against loss of cards. Prominently, this feature is available for top-end customers like platinum card users. The card company ties up with an insurance company and pays a premium on behalf of the customer to cover against misuse due to loss or theft of card.
But both the cover period (prior to reporting loss of the card) and the cover amount could differ depending on the card company.
For instance, Deutsche Bank, covers any financial liability up to 48 hours prior to blocking of the card for all its customers. The liability cover equals that of the cardholder’s credit limit.
One needs to check with the issuer on the areas they would provide cover for. While some issuers cover the customer for any liability arising out of skimming, others may not cover online frauds. One should also know the amount the insurer will cover in case of such frauds.
Internet transactions: According to a Reserve Bank of India mandate, all card issuers have introduced a second-level authentication for credit cards. When a person uses his card for an internet transaction, he needs to enter a password for every transaction made on the net, after punching the card details.
To further reduce scope of fraud, some issuers have started sending out text message alerts to customers whenever there is a request to change the password.
Phone transactions: Next year on, all card companies will provide users a PIN for any transaction done on phone. To pay mobile phone bills or book airline tickets on a credit card, the customer just needs to punch the card number, expiry date and CVV number. A fraudster can easily use these features in case he acquires the card. RBI has mandated banks to provide a second level of authentication for such transactions from January 1, 2011. While these technologies do help in keeping your card more secure, they are not foolproof.
Getting compensation from the company in case of a misuse is not an easy task. Unless, it can be proved that employees of either the courier company or the card issuer were involved in the fraud, the customer is liable to pay for any misused amount.
To prevent frauds, never reveal card details like PINs, passwords and CVV code either on the phone or in emails to anyone, including bank executives.
