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Laws related to credit card usage and fraud in India are designed to protect you by ensuring transparency, fairness, and security. These regulations govern both issuers and users, providing clear guidelines to prevent misuse and safeguard your rights.

 

Learn about the laws and penalties for credit card fraud in terms of various schemes, protection acts and sections under the Indian Penal Code (IPC). 

Laws on Credit Cards in India

Here are some important laws governing credit card usage in India, which aim to ensure financial security:

 

RBI Guidelines

The Reserve Bank of India (RBI) has implemented comprehensive regulations for credit card issuers. This ensures transparency and accountability in the issuance and usage of cards. These guidelines protect consumers by promoting ethical practices and preventing exploitation.

 

Key highlights include:

  • Banks with a net worth of ₹100 Crores or more can issue credit cards independently or through tie-ups

  • Policies for issuing credit cards need to comply with RBI's Fair Practices Code and be publicly accessible

  • Credit risk assessments have to be carried out, especially for individuals without independent financial means

  • Banks can provide co-branded, corporate, and add-on cards to employees of corporate customers

  • Issuers need to conduct thorough due diligence on co-branded card partnerships with non-bank entities to reduce reputational risks

  • Transparency in interest rates, fees, and terms is compulsory for all credit card issuers

  • Billing needs to allow sufficient payment time, with clear communication on the Annual Percentage Rate (APR), penalties, and minimum payment implications

  • Wrongful billing disputes have to be resolved within 60 days of being reported

  • Cardholders can surrender cards without penalty if the issuer changes the charges unfavourably

  • Direct Sales Agents (DSAs) and Direct Marketing Agents (DMAs) have to follow a prescribed Code of Conduct

  • Confidentiality and customer privacy have to be maintained at all times by credit card issuers and their agents

  • Issuers need to strictly adhere to Anti-Money Laundering (AML) Standards, Know Your Customer (KYC) Norms, Combating of Financing of Terrorism (CFT) norms, and RBI guidelines

  • Banks and NBFCs need to establish internal control systems to combat fraud and actively participate in fraud prevention committees and task forces

  • Issuers may reduce misuse of lost or stolen cards by issuing cards with photographs, PINs, or signature laminations

  • Security and risk mitigation measures for card usage and electronic transactions need to comply with RBI guidelines

  • Banks have to block lost cards immediately upon being informed, with formalities like lodging an FIR to follow within a reasonable period

  • Banks may provide insurance for lost-card liabilities to customers who pay the insurance premium

 

RBI’s Integrated Ombudsman Scheme, 2021: 

The RBI launched this scheme in 2021 to streamline the grievance redressal process for customers. This scheme simplifies how you can address complaints related to banking services, including credit cards. It offers the following features:

  • A simple process for filing complaints through the RBI’s Integrated Ombudsman Scheme

  • The option to approach the RBI Ombudsman if your complaint remains unresolved for 30 days

  • The scheme covers issues related to banking services, including credit cards and payment systems

  • It ensures a fair and transparent process for resolving grievances without lengthy delays

 

The Banking Codes and Standards Board of India (BCSBI)

The BCSBI sets guidelines for fair practices in the issuance of credit cards. Its purpose is to:

  • Promote transparency and fairness in your relationship with the bank

  • Ensure you receive clear and honest information about credit card terms, charges, and conditions

  • Protect you from unfair practices, and ensure you're treated with respect and dignity

  • Help resolve any grievance or complaint you may have in a timely manner

  • Ensure banks follow ethical practices in debt collection and recovery

  • Promote financial literacy so you are well informed about your rights and responsibilities

 

Payment and Settlement Systems Act, 2007:

This act regulates payment systems in India, including credit card transactions, ensuring secure and efficient processing. It provides a framework for holding payment system operators accountable. Key provisions include:

  • Ensuring secure and efficient transaction processing

  • Holding payment system operators accountable for fraud or system failures

  • Setting guidelines for dispute resolution in payment systems

  • Establishing compliance standards for operators to follow

 

Consumer Protection Act, 2019

This act protects consumers against unfair trade practices and allows you to file complaints against credit card issues. It helps you:

  • Seek protection under the Consumer Protection Act, 2019

  • File complaints against unfair trade practices or disputes related to credit cards

  • Protect your rights to fair services, guard against deceptive advertising, and avoid hidden charges

  • Access a grievance redressal mechanism

  • File complaints at district, state, or national levels based on the claim amount

Penalties for Credit Card Fraud in India

Credit card fraud is a serious offence in India under the IPC and the Information Technology Act of 2000. Offenders may face penalties ranging from imprisonment to substantial fines, depending on the nature of the fraud.

 

Here are the credit card penalties in India based on relevant sections of the law:

Section

Description

Punishment

Section 66C, IT Act, 2000

Theft of identity

Imprisonment of up to 3 years and/or fine up to ₹1 Lakh

Section 66D, IT Act, 2000

Cheating by personation using any device

Imprisonment of up to 3 years and/or a fine up to ₹1 Lakh

Section 468, IPC

Forgery with the intent to cheat

Imprisonment of up to 7 years and a fine

Frequently Asked Questions

What is the RBI rule for credit card fraud?

As per RBI regulations, you need to report any credit card fraud to the issuer first.  If the issue remains unresolved even after 90 days, give a missed call to 14440 to report the matter to the RBI.

What is the punishment for credit card defaulters in India?

In India, failing to repay credit card dues is not considered fraud. However, it can lead to serious consequences. Defaulters may face penalties, increased interest rates, and legal actions if the debt remains unpaid for an extended period. 

What is the law for credit card fraud?

The Information Technology Act, 2000 (IT Act) and the Indian Penal Code (IPC) address crimes like fraudulent use of card details, including forgery and cheating. Offenders can face penalties, including imprisonment and fines. Financial institutions also offer fraud protection to safeguard you against such risks.

Is there any legal action against credit card fraud?

Yes, it is a criminal offence in India under the Information Technology Act of 2000. Offenders can face up to 7 years of imprisonment and fines. 

Can I get my money back after credit card fraud?

Yes, you can recover your money after credit card fraud if you report it immediately. Banks typically have to refund any amount lost after you report the incident as per RBI guidelines. However, note that it depends on the time you take to report the fraud.

 

Here are the mandated timelines depending on when you report the fraud:

  • Within 3 working days: You will have zero liability, and the bank will process the refund within 10 working days

  • Within 4-7 working days: Your liability will be the lesser of the fraudulent transaction amount or the maximum liability limit for your credit card

  • After 7 working days: The liability is determined according to the policy rules approved by the bank's Board

How can I protect my credit card from fraud?

To protect yourself from credit card fraud, keep these points in mind:

  • Store your card information in a safe place and avoid sharing it with others

  • Check your credit card statements frequently for any suspicious activity

  • Only save your card information on trusted platforms and apps

How to find credit card fraud lawyers near me?

To find lawyers who can help you address credit card fraud, you can search online for law firms or independent lawyers who specialise in such cases. You can also ask for recommendations from friends and family. 

 

Ensure you read reviews and testimonials to make an informed decision. An attorney can assist in evaluating various options to make the case in your favour. These may include proving identity theft, insufficient intent, and inadequate evidence.

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