Theft and misuse of credit/debit cards have seen a dramatic rise in recent times. Here is why you must enrol for card protection services
THANKS to the growing popularity of plastic money, maintaining more than a couple of cards has become more the rule than the exception. While the increasing reliance on this mode of payment has indeed given a boost to convenience, it has also meant that the security-related risks users are exposed to have gone up considerably. Misuse of stolen cards, skimming etc continue to be cause of concern for cardholders.
Though the Reserve Bank of India's directive making two-factor authentication mandatory for transactions carried out online has made the process more secure, the threat lives on in the offline world.
ENTER CARD PROTECTION SERVICES
Some insurance companies and banks offer protection against misuse of credit and debit cards. For instance, Tata AIG General Insurance offers protection that covers identity theft and fraudulent charges. Under the former, expenses related to resolving the issue as well as expenses the holder has to pay for any resultant unauthorised credit are covered. The latter extends protection — up to 12 hours prior to loss reporting — against fraudulent use of your debit or credit card.
Several banks, too, have taken steps towards providing their customers access to a protection plan that offers cover in the event of their stolen card being misused. HDFC Bank offers this facility to its debit card holders, where protection is provided against fraudulent Point of Sale transactions.
In addition, over the past few months, a clutch of banks and credit card companies — including Citibank, Axis Bank, ICICI Bank, HSBC and LIC Cards — have jumped on to the bandwagon by teaming up with card protection service provider CPP Assistance Services. For availing of this service, one needs to get in touch with his/her bank, and enroll for the scheme by registering all the cards — including credit, debit and loyalty rewards cards — you wish to cover. If you lose your cards or discover later that cards have been misused, you need to dial the toll-free number provided at the time of enrolment and report the same, in order to block the cards. Since the facility is issuer-agnostic, customers maintaining cards of more than one bank need not intimate all card issuers, in case they lose their wallet.
The programme provides cover up to seven days prior to the user informing the contact centre. Depending on the plan selected, the cover could go up to Rs 1 lakh prior and Rs 20 lakh post intimation. The cover is provided through a group insurance policy from Bajaj Allianz General Insurance.
The biggest risk that card users face is that of realising the loss a couple of days later. In this case, you can inform the call centre even if the loss/fraud comes to your notice up to seven days later. It is beneficial for those who travel frequently and use plastic as their primary form of payment.
KEEP AN EYE ON EXCLUSIONS AND SUB-LIMITS
The features offered by various card protection plans may vary and you need to take a close look at the exclusions. For instance, HDFC Bank's Zero Liability scheme for its debit cards does not extend the cover to ATM transactions and the liability is restricted to a maximum of Rs 1 lakh per card. In case of Tata-AIG's covers, fraudulent transactions made more than 12 hours prior to first reporting the loss of the card and the ones conducted after reporting the loss are not covered.
In case of the service offered through CPP Assistance, you need to bear in mind that under the basic plan, the total cover pre-notification amounts to Rs 50,000 (Rs 1 lakh in case of the premium version), even if more than one card has been misused. Within the limit, the maximum pre-notification cover provided for each card under the two plans is between Rs 20,000 and Rs 40,000.
Another key limitation of this scheme is that the protection gets activated only after your card is lost, and not if the fraudulent transaction has taken place because your password or other security details are compromised. Besides, since the offering is in the nature of a group insurance policy, the reimbursement is subject to the insurance company being satisfied about the validity of the claim made. The bank and the protection service provider have no role to play during this investigation process.
The fact that process involves three entities — the card issuer, the service provider and the insurance company, with each having limited responsibilities, may be a source of discomfort for individuals wishing to avoid dealing with multiple agencies.
