No liability for prepaid payment instruments users if fraud reported in 3 days, says RBI

Prepaid payment instruments (PPI) comprise mobile wallets, prepaid payments cards, and paper vouchers. If it is a third-party breach, where the transgression is neither on the part of the PPI issuer nor the customer but elsewhere in the system, the customer will have no liability if they report it within three days. For banks, the rules are already in place, but the latest notification expands the ambit of customer protection.

If the fraud is reported within four to seven days, the liability will be the “transaction value or USD 143 (Rs 10,000) per transaction, whichever is lower”. Considering PPIs are loaded typically with less than Rs 10,000, this means a delay of three days will mean that the user will have to incur the full loss.

If the fraud or error is reported after seven days, the board-approved policy of the PPI will prevail. The central bank’s move aims to extend the limited liability of customers of payment entities not covered by the previous guidelines.

To facilitate reporting, PPI issuers will have to provide customers with “24x7 access via website/SMS/email/a dedicated toll-free helpline,” the guidelines said. There should also be a direct link on the PPI issuers’ website. Once complaints are lodged, the customer should be provided with an “auto response” to acknowledge the receipt of the complaint.

Depending upon the timing of the complaint lodged, the notional amount defrauded, or decided as a liability, should be reversed to the customer’s prepaid account within 10 days of the complaint. This has to be done “without waiting for settlement of insurance claim”, even if such reversal breaches the maximum permissible limit applicable to that category of PPI. The credit would be value-dated.

The complaint has to be resolved within 90 days. If the PPI issuer is not able to resolve the complaint within the stipulated period, the customer will have to be compensated “irrespective of whether the negligence is on the part of the customer or otherwise”, the RBI said.