While zero-liability on fraudulent credit-card purchases is the source of many headaches for CNP merchants, it is also the lubricant that made e-commerce’s growth in the U.S and elsewhere possible. Without the confidence that their accounts were protected from fraud, not many consumers would have had the courage to enter card details on Websites when shopping on the Internet was new. India, which is at a nascent growth stage, has the potential to make huge strides in e-commerce very quickly. And, late last week, the Reserve Bank of India (RBI) proposed zero-liability rules for consumers on e-commerce and mobile transactions—with conditions.
The RBI published a draft of rules covering consumer liability for unauthorized electronic banking transactions. Consumers in India will have no liability for fraudulent purchases made on their account if they notify their bank within three days after the bank sends their statement with the unauthorized charge. Consumers also have no liability when there is fraud or negligence on the part of the bank, no matter when the bank is notified. The proposal seeks to limit consumer liability if they notify the bank between four and seven days after receiving their statement. After seven days, liability is established by the bank’s rules.
The RBI is accepting public comment via email on the draft until Aug. 31, 2016.