Wednesday, March 12, 2008

RBI and banks take steps to educate customers to keep vigil against card frauds

More and more people are getting used to credit card. Along with this the number of frauds is also on the rise. There has been 80 per cent of increase in the credit card frauds over the past three years.

Seeing the increase in credit card fraud the Reserve Bank of India and banks have started taking steps to educate customers about frauds that may possibly happen via Internet and while using credit cards. Banks are bringing in products with additional safety features.

A senior bank official said since new channels of banking are opening up, there are more chances of increase in number of fraud cases so there is the need to educate customers about them.

According to figures given in reply to a question in Parliament on March 4, 2008, the total number of frauds has gone up from 12,374 in 2005 to 21,687 in 2006, and 22,280 in 2007.

In the case of credit card frauds, the number has gone up from 8,789 in 2005 to 17,268 in 2006, and 17,294 in 2007.

According to Mr Hemant Kaul, President, Retail Banking, Axis Bank one reason for their increase in credit fraud is credit card transactions have grown much faster than other transactions.

Recently moving on the steps Axis Bank had launched ‘Visa Platinum Credit Card’ based on the EMV (Europay, MasterCard, Visa) standard, with an embedded chip to store the cardholder’s information in encrypted format to provide security against possible misuse in the form of counterfeiting and skimming. Whenever a customer swipes a card with an embedded chip at the point-of-sale terminal, the chip sends a secret message to authenticate every transaction, making it difficult for a fraudster to steal the information.

While ICICI Bank has taken precautionary steps like sending an SMS to customers on every transaction made on their credit card. “This way, if it is not the customer who is making the transaction, he or she will know immediately,” said Mr V. Vaidyanathan, Executive Director, ICICI Bank.

ICICI Bank and HDFC Bank have a huge base of customers using the internet so these banks are facing the danger of phising also.

In phising a customer gets an e-mail that deceptively claims to be from the bank and asks for account-sensitive information, credit card numbers, passwords and Personal Information Numbers (PIN). It often resembles a notice from the bank and misleads customers.

Though, ICICI Bank has been regularly issuing letters to its customers, warning them to be wary of fraud Web sites and not to disclose personal details over the Internet.

A warning on the Web site of HDFC Bank has also been placed to caution customers about fraudulent e-mails that ask for personal details and threaten to restrict the Net Banking access in case customers do not respond.

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