Credit cards issued by Reserve Bank of India Yes, that’s the latest trick fraudsters are using to dupe people. This article covers how people were duped in the name of RBI credit card. What are the various kinds credit card frauds? How India has stringent measures to avoid  frauds, What precautions you can take to avoid the fraud?

How were people duped :Modus operandi of RBI Credit Card Fraud

Person is sent a credit card which allows withdrawal of money up to a certain limit from a bank account (usually a small sum). Thus people are convinced that the credit card works. The fraudster then gets the victim to deposit a huge sum of money in the same bank account. Once victim deposits the money the card stops working. After that the holder of the card or victim does not hear from the fraudster.

Please note that the Reserve Bank as India’s central bank, does not carry out any business with an individual, not for bank accounts(saving, current) cards(credit card, debit card) , online banking services or giving funds in foreign exchange or any other form of banking services.  

In recent years, the Reserve Bank has been target of many such scams. Fake Reserve Bank website for online transactions (RBI warns about Fake Website in its Name) , Luring members of public to secure their bank accounts against such frauds by asking them to share the bank account details, including user id/password, through an email or by clicking on a link given in email. ( RBI cautions Public Not to respond to Phishing Mail sent in its Name ). Such fictitious offers are also made in the name of other public institutions, such as, International Monetary Fund (IMF), Income Tax authorities, Customs authorities or public figures like Governor, Dr. Raghuram Rajan or other senior RBI officials. Others common scams are winning a lottery without participating in, transferring inheritance money for some transfer charges (Nigerian scam), job offer etc. Our article Phishing emails Online Scams talks about such scams in detail.

Falling prey to such offers can result in compromising one’s own crucial personal information that may be misused to cause direct financial and other loss. People  in their own interest, should refrain from responding to such offers in any manner. Rather, they should immediately lodge a complaint with Cyber Crime branch of the Police

What the incidence level of card frauds in India is and whether it is alarming?

Unlike in United States, England and other countires where the frauds are reported as part of the legal and regulatory mandate, in India, there is no legislation to make frauds available in the public domain. Card scheme companies also do not publish data. Some statistics   As per WorkshiponcardFrauds During February 2013 in the Indian Parliament, Minister of State for Finance reported 8322 positive cases of fraud related to cards and internet banking during calendar year 2012 involving Rs 53 crore.In some cases you just can’t believe the reported figures. Checkout,  In February 2013, in Times of India, Mumbai 17 phishing cases, 47 cases of credit card frauds were noted from 2010 to 2012(and  the annual crime statistics on the Mumbai police website was in single-digits).  Though there aren’t any official figures  card fraud is rising. Let’s see what are kinds of card frauds.

Kind of Card Frauds

Credit card frauds is where one uses other’s cards to purchase goods or services or funds while using other’s card fraudulently.

How You Can Get Conned

• Phishing or Spoofing: You get e-mails that  appear to have sent by an institution you deal with such as  banks, e-commerce websites. Some ask for verification of credit card or bank account data, or a date of birth. When you reply, thieves use the precious data.
• Vishing & Smishing: Phishing via phone-calls or SMS. You get a call from someone pretending to be your bank exec with an offer or for verification . The calls are just like from bank.
• Skimming: Obtaining a person’s card details swiping a card using a card copier to copy the details contained in its magnetic strip. Often this happens with cooperations of  people handling cash at shops, restaurants.
• Carding: Carding is the process to verify the authenticity of the stolen data of the credit cards. Thieves first use it  for a small purchase. If it is successful  it is  used for big amounts.
• Cloning: Creating duplicate cards by using inexpensive technology which is easily available. These cards are then used for transactions or online.

India and Stringent measures to avoid credit card fraud

In India, according to the credit card contracts, the card-issuing company isn’t liable for any fraudulent transaction unless the customer files a report immediately. Once card holder reports  and blocks the car, he is no longer liable. Prevention is better than cure, acting on this principle, RBI has come up with stringent norms.

Using credit cards online has become more secure after the Reserve Bank of India added another security layer in addition to credit card details, an independent password. The RBI has made it mandatory to validate offline credit card payments in India with a PIN (personal identification number) and online Indian payments with an OTP (one-time password) to be generated by SMS on the mobile phone. An OTP gets sent to phone within seconds of the SMS request and is valid for a single use, to be made within 10-30 minutes.  There is however difference in Indian and foreign payment gateways. Such websites do not require such security measures even for payments made from India. What this means is that if you purchase a book on Amazon.in you would have to enter CVV number and also have to get OTP but on Amazon.com no OTP autentication is required.

Other stringent norms are:

• Restriction of card to domestic usage  for customers who have not used their cards internationally
• Converting  existing cards to EMV chip cards , for customers who have used their cards internationally. EMV stands for Europay, MasterCard and Visa. EMV cards have a small, metallic square in front of the card which is actually a computer chip. The reason why these cards are safer than magnetic strip card is because  the magnetic stripes contain predefined data which does not change. But whenever you use  EMV card for payment, unique transaction code is created by chip which cannot be used again. These cards are not swiped but  are inserted  into a slot (technically called card dipping) for credit card transactions
• For international usage of credit cards, setting up of  threshold limits based on risk profile and usage of customer.

What you can do avoid credit Card fraud

• Access your bank account on a personal device
• Select complex passwords, which can not be easily guessed. change them frequently; use different passwords for different accounts
• Do not write your passwords Or PIN (especially on back of pin) or share them; don’t save them on computers that many can access
• Go to the URL manually instead of clicking on a link in an email
• Ensure that websites where you give personal information have URL starting with https:// (have SSL encryption)  and  a lock icon.
• Use the virtual keypad to enter card number and other details
• Log out of sites before closing the browser window
• Register for Verified by Visa or MasterCard Secure programme.While using this card a phrase will be displayed and another password will be asked.
• Banks also provide a temporary one-time virtual credit card.
• Don’t provide financial information in response to calls or e-mails
• Use your credit card at trusted stores only not at every retail store that you visit.
• Try to ensure that credit card is swiped in front of you. If this is not possible, use cash instead.
• Install an anti-phishing software on your computer /mobile especially if you carry out online transactions
• Monitoring your bank account online or your bank statements regularly and of course choosing the right credit card
• Going for cards which offer security features  For example American Express offers  a range of security features  for maximum protection against credit card fraud such as personal security keys, pre-purchase verification, irregular Account Activity Alerts & automatic time-outs when online banking
• Register Your mobile number  with credit card company so that every time a transaction is completed you receive an SMS.

Related Articles:

• What happens when credit card is swiped?
• Credit Card Fees and Charges
• Credit Card Debt
• Credit Card Payment Calculator
• Cyber Crime : Credit Card Fraud,Bank Account Hacked
• CIBIL CIR : Account and Negative Factors.
• FAQ regarding CIR report

There is always threat of credit card frauds. However, you can take some precautions to avoid those.  If it seems too good to be true, it probably is. Have you been a victim of credit card fraud? If yes how? How do you avoid credit card fraud?