Credit Card Fraud and Relevant Legal Provisions in India

By: kinshuk jha

Today plastic is the convenient, easy and fashionable alternative to wads of paper. With one swipe, credit cards have changed the way we live. Unfortunately, along with the convenience has come related crime. Thus, the primary objective of this article is analysing this problem in a global as well as Indian perspective. An attempt has also been made to enlist the various legal provisions available as remedies if a person suffers from such fraud.

آ Credit card fraud involves withdrawal of funds and obtaining of goods and services by using an unauthorized account. Otherwise inaccessible personal information stored on computers is stolen in order to use a card. Due to the virtual explosion of credit card business throughout the world, security has become critical in the entire process. There were about 60 million credit card holders in the sixties and according to an estimate, the number has gone up to more than a trillion now.

In India, credit card companies make a provision in their contract with the client that they, the company, would not be liable for the fraudulent transaction unless the client loses his/her card and reports the loss immediately. Sometimes the banks and credit card companies try to save their skin by inserting a clause in the relevant contract. This is purported to absolve the company in case a fraud occurs on the stolen card and the client fails to notify the loss in time. This unilateral provision however has not stood the test of legal scrutiny. The courts have placed the burden of loss on the issuers.

In India, the Mail Order Telephone Order (MOTO) type account for the bulk of credit card frauds. This occurs when the card is not actually presented, but the details are given on the application form to buy goods or services or when the transaction is done on the telephone.

Fraud through fake cards is not as rampant in India as in the USA. Techniques have been developed whereby the number and other information on the magnetic strip is erased and a new number is embossed. When the card does not work on the swiping machine, the merchant manually processes the details of the card to complete the sale. This procedure is called skimming of the cards.

In the USA, identity theft is also quite prevalent and is supposed to be one of the fastest growing offences in America. The fraudsters adopt another person’s identity to gain access to their monetary sources. In the case of online transactions, â€کsite cloning’ is resorted to where the site clone created is made to look like the original site in order to obtain the credit card details of unsuspecting customers. Similarly, false merchant sites are also created where cheap goods lure customers into giving their card details.

Scared by the ever increasing cases of credit card fraud, the affected companies and banks have taken various steps to minimize it. Manual reviews of the transactions on the card are undertaken, but this requires a high level of human intervention and increases costs. In the USA, Address Verification System (AVS) has been developed for use in the â€کcard not present’ scenario. The system is designed to check whether the address given by the buyer matches with the one on record.

Visa has devised a Payer Authentication System based on PIN similar to the system used on ATM cards. This is a channel between the bank and the customer used to authorize online transactions. With the increase in cross border ecommerce the issuers in India will have to update their arsenal to combat the forgers on the same lines as their Western counterparts. The Information Technology Act and Rules, passed in 2000, provide penalties for the tampering of computer source documents and hacking of computer systems. No specific mention has, however, been made of Credit cards or financial transactions. The RBI has formed the Credit Information Bureau of India (CIBIL) in collaboration with Dun and Bradstreet who will maintain the records of all individuals who want to avail of finance from banks and credit card companies in India.

The Indian Penal Code contains provisions to check economic crimes such as Bank Fraud, Insurance fraud, Credit card fraud, stock market manipulation, etc. The local police deal with the IPC crimes falling under the broad categories of â€کCheating’ (Section 415-424), â€کCounterfeiting’ (Coins & Stamps Section 230-263A and Currency Section 489A-489E) and â€کCriminal Breach of Trust’ (Section 405-409).

آ 

Online Credit Card Offence & Indian Law:

آ 

So far as Indian legal position is concerned, any offence pertaining to online payment through credit cads will come within the purview of Information Technology Act, 2000 read with relevant provisions of Indian Penal Code, 1860. Section 378 of the Code defines the term “theft� as follows:

آ 

“Whoever intends to take dishonestly, any property, out of the possession of any person without the consent of that person moves the property in order to such taking, is said to commit theft.�

آ 

In order to commit theft following elements are required to be satisfied:

(a) The intention must be dishonest.

(b) Such property must be movable in nature.

(c) Such property must be taken out of the possession of its owner.

(d) Such property must be taken without the consent of the owner.

(e) Such property must be removed from its original place to another.

Now we have to examine whether online credit card theft satisfies the abovementioned requirements in order to book the offender to justice. This definition, if interpreted in strict sense, does not include the online theft of credit card information. But, if a merchant dishonestly obtains the blank purchase slip and forges the signature of the cardholder’s signatures on it and thereafter obtains the payment from bank, he can be booked under the offence of forgery.

آ 

Hacking has become an important tool in the hand of cyber criminals to take away the confidential information relating to credit cards and use it illegally for their personal advantage i.e. purchasing goods or online transaction of money etc.

آ 

To deal with this menace, our Parliament has been enacted the Information Technology in the year 2000. Following penal provisions of this statute are relevant to mention here.

آ 

Section 66- This section provides the following penalties for hacking with computer systems:

آ 

(1) Whoever with the intent to cause or knowing that he is likely to cause wrongful loss or damage to the public or any person destroys or deletes or alters any information residing in a computer resource or diminishes its value or utility or affects it injuriously by any means, commits hack.

(2) Whoever commits hacking shall be punished with imprisonment up to three years, or with fine which may extend up to two lakh rupees, or with both.

The offence under this Section is cognizable and non-bailable.

آ 

Section 43- Clauses (a), (b) and (g) of Section 43 state that if a person has unauthorized access or secures access to computer, computer system, computer network or downloads copies or extracts any data from such computer, computer system, computer network or even assists another person to facilitate access in the aforesaid manner respectively, he shall be liable to pay damages by way of compensation not exceeding one crore rupees to the person so affected.

It is quite apparent from the above that besides legal protection it is necessary to carefully examine the technological and contractual protection existing within the system because law is not an alternative to other security measures required to be taken by the cardholder while making online payment.

آ 

آ 

آ 

آ 

آ 

آ 

آ 

آ 

Conclusion

In India, credit card fraud is mostly limited to the physical space. Online con jobs make up just about 1% of the total numbers here, unlike 40% in the developed world.

But, as consumers graduate to the shop-easy internet and pay with their cards, instances of fraud are bound to rise. While we don’t have statistics, as access to the web increases, reported cases of card fraud are estimated toآ  rise at 20-30 % every year. In online transactions, contracts are one-sided and the customer is always held responsible in case of fraud.

Phishing, where a consumer gets a fictitious email from a fake site or blog seeking sensitive card information, is a commonly-used defrauding mechanism. To top it, people are careless in offering their card details.

Almost all the banks issuing credit cards issue various guidelines and suggestions to the customers from time to time in order to cut short the rate of credit card frauds and misuse to a minimum possible level.

Thus, we can conclude that with the help of the legal remedies available as cited earlier in the Article, penal action can be brought against the offenders who are held liable for credit card frauds and misuse.

آ 

آ 

آ 

آ 

About the Author

V year BBA LLB, Symbiosis Law School,Pune

(ArticlesBase SC #539838)

Article Source: http://www.articlesbase.com/ - Credit Card Fraud and Relevant Legal Provisions in India

Related Articles:


PCI Compliance and Online Credit Card Security





Credit Card Scams How to Prevent Becoming a Victim of Phishing

A phishing scam is the process of attempting to getsensitive information such as credit card details,A phishing scam is the process of attempting to getusernames, passwords and social security numbers byA phishing scam is the process of attempting to getpretending to be a trustworthy organisation...



Get Beyond the Credit Card Expanding ECommerce Globally

The majority of purchases made online in the United States are paid using credit or debit cards. Worldwide, however, other payment methods are more popular. In fact, in some countries, less than half of purchases are made via credit card...



If Its Free Why Do I Need A Credit Card

Have you ever gone to a website, and headline says you get this fantastic software or eBook for FREE that will change your life or make you rich? Of course you have. But, then I scroll immediately to the bottom of the site before reading it, as I want to know how much it costs. And what do I see? A mastercard or visa logo...



How Pci Dss Security Standards Protect Your Credit Card Transactions

Payment Card Industry Data Security Standard (PCI DSS) is a security feature that was developed by the major credit card companies to help businesses that process credit cards prevent credit card fraud through various security vulnerabilities that would exist otherwise. All companies that store, transmit, or process credit cards must be PCI DSS compliant in order to process these transactions. If they are not, then they can lose their ability to accept credit cards...



Taking Advantage Of Online Offers Without Giving Up Your Credit Card Info

My wife works for the local BlockBuster video in town and they are supposed to get people to sign up for an online account but the problem is that a lot of people are afraid to sign up for these things because of fear of having to put their credit card info on the form. With the world coming online credit card fraud is on the increase. How are we able to take advantage of the savings from these online offers without having to give up our personal credit card information?My wife works for the local BlockBuster video in town and they are supposed to get people to sign up for an online account but the problem is that a lot of people are afraid to sign up for these things because of fear of having to put their credit card info on the form...



Point of Sale Software can Help with Credit Card Processing

Point of sale software gives business owners a convenient way of checking out customers and of recording sales. It can keep a record of the store inventory, updating it when an order is processed. It can also print out receipts; carry out credit card processing, track customers, etc...



Important Tips For Better Search Engine Optimization From Expert SEO Company in India

Search engine optimization is actually the effective utilization of search engines to draw traffic to a Web site, is an art. It is a continuously, ongoing evolving, high maintenance process that includes the customization of a site for better search engine ranking. Here you can find tips which can help you get into good search engines along with increasing traffic...



Benefits of ID Card Software

ID card software is designed to help you create your own personalized ID cards. This type of software makes it possible for anyone to design and create your own identification cards for any business whether it is large or small. Not only does it make this task easy but it can be lots of fun as well...



Work From Home Online Success The Power of Post Card Marketing

The state of the USA and other major countries economies have lead to many looking to work from home and make a living unlike any other time. Success in a work from home online home-based business is achieved by being able to effectively advertise and drive traffic to your business website.The state of the USA and other major countries economies have lead to many looking to work from home and make a living unlike any other time...

Most Recent News





More Related Articles


Focus On WhiteCollar Crime Accounting Fraud and Computer Crimes Creates Need For Qualified Investigators

An epidemic of white-collar financial crime has resulted in the development of specialized education programs focused on economic crime investigation and fraud management. These college-level degree programs attract students who are interested in law enforcement and are attracted by the very unique nature of these types of crimes and the special investigative techniques required to solve them. There seems to be no end to the greed in the hearts of some professional business people...



Keyword Discovery Keep Your PPC Campaign Fresh and Competitive by Discovering New Relevant Keyword

Keyword discovery is a powerful, driving force in in the success or failure of a paid search marketing campaign.Keyword discovery is a powerful, driving force in in the success or failure of a paid search marketing campaign.There€™s more to effective pay per click (PPC) than just bidding on the right keywords...



Why India is the Best for SEO Services

Search Engine Optimization or SEO is the most popular and demanding term in today€™s online marketing era. Commercial websites have found its own niche due to increasing visibility of the website and it is only because of search engine optimization. Now, what does it exactly do? Apart from helping to make your website possess a good ranking in search engines, it helps to draw traffic to your websites...



Software outsourcing India

Outsourcing is the passing out some work to another company or a person. In other it is contracting the third person to do the particular function. Today almost all the organization outsources in one way or another...



How TO Select the SEO Company in India that will really work

Search engine optimization is the processes of improving the volume of traffic to a website from search engine. When a site appears in the search results list, the more Traffic it will receive from the search engine. SEO is the art of optimizing a web site by improving internal and external features in order to increase the traffic that the website receives from the various search engines...



Protection Against Identity Fraud Identity Theft

Identity theft and identity fraud refer to all types of crimes in which someone wrongfully obtains and uses another person's personal data in some way that involves fraud or deception, usually for economic gain. Unlike fingerprints, which cannot be duplicated, personal data ¬ especially a person€™s Social Security number, bank account or credit card number, telephone calling card number etc.¬ can be used by people who might obtain them using illegal means...



Flash Game Development and Design in India

Flash game is a real live entertainment resource for the people who love to play games. These games have given rise to the gaming industry as they are getting attractiveness day by day. They are generating lots of income and thereby contributing to the business in a huge way...



Data Outsourcing India

Is your organization suffering due to the large volumes of unorganized data? Are you worried regarding the problems your company is facing because of huge unstructured data? Stop worrying as here is a very easy solution for all your data related problems.Is your organization suffering due to the large volumes of unorganized data? Are you worried regarding the problems your company is facing because of huge unstructured data? Stop worrying as here is a very easy solution for all your data related problems.Many organizations and companies has volumes of data that is unorganized and unstructured...



Professional Health Care Business Card Designs That Does the Job

The health care industry is a people-oriented business and it will be certainly advantageous for health care professionals to be viewed as pleasant and easy to talk to. One of the ways to achieve this is through nicely designed business cards that reflect a caring and understanding personality behind the card.No one understands this better than people who work in the health care business...



Factors to Consider Before Purchasing a Card Printer

Identity cards have become common place in daily life. We use them for gym membership, library cards, driving licences and employee id badges, to name a few. Most have been produced using a card printer...