Disputed credit card charge rejected? Know your options to seek redress | Personal Finance
A fraudulent credit card charge need not leave the customer liable for the loss. In Rakesh Kumar v. SBI Cards & Payment Services, the Delhi North District Consumer Commission held SBI Cards & Payment Services guilty of deficiency in service.
Kumar’s card incurred two unauthorised charges totalling ₹15,000 on May 23, 2024, while he tried to buy butter through an online offer using the “Big Bazaar” name. He immediately reported the transactions, blocked the card and filed a cybercrime complaint. The court found that the card issuer had failed to establish customer negligence, provide provisional credit on time or resolve the complaint within 90 days. It ordered the issuer to refund ₹15,000 with annual interest of 7 per cent and pay ₹10,000 as compensation.
“The case highlights the importance of reporting suspicious charges promptly, preserving records and following up in writing. It also underlines that a card issuer must investigate complaints and cannot simply hold customers liable without evidence of negligence,” says Siddartha Karnani, partner, King Stubb & Kasiva, Advocates and Attorneys.
Identify the type of dispute
A disputed credit card charge is a transaction the cardholder considers incorrect or unauthorised. An unauthorised payment occurs without the cardholder’s consent, possibly because of fraud or compromised card details.
“Other disputes concern legitimate purchases where the merchant has charged twice, billed an incorrect amount, failed to deliver goods or services, supplied defective products, or not processed an eligible refund. Identifying the type of dispute helps determine the appropriate resolution process,” says Raoul Kapoor, co-chief executive officer (CEO), Andromeda Sales and Distribution.
Check and report promptly
Check whether the charge relates to a subscription, pending payment or delayed adjustment. For duplicate billing, incorrect amounts or missing refunds, contact the merchant and inform the issuer if the issue remains unresolved.
“For unauthorised transactions, immediately alert the issuer and block the card. In suspected online financial fraud, call 1930 and report it on the National Cyber Crime Reporting Portal,” says Kapoor.
Raise a formal dispute
Raise the dispute through the issuer’s helpline, app, website or email and obtain a complaint reference number.
“Provide the transaction date, amount, merchant name, reason for the dispute and supporting documents, such as receipts, statements or refund correspondence. Report unauthorised transactions immediately, as delays can affect liability,” says Kapoor.
Reserve Bank of India (RBI) rules require issuers to explain disputed bills, with supporting evidence, within 30 days. Deadlines for merchant-related disputes vary, so check the issuer’s terms promptly.
Preserve evidence
The reporting timeline is crucial in card fraud disputes. Retain the transaction alert, statement showing the disputed charge, call logs, complaint reference number and screenshots of online complaints. Following a telephone complaint, send an email summarising the conversation to create a dated record.
“Preserve all correspondence, follow-up reminders and relevant advertisements or web pages. A cybercrime complaint does not replace reporting the matter to the card issuer. Keep evidence showing that you did not share your one-time password (OTP), in case the issuer questions your conduct,” says Karnani.
Who bears the loss?
Relying on the RBI’s circular dated July 6, 2017, and court rulings, the commission held that the bank or issuer bears the burden of proving customer negligence.
Liability depends on who was at fault and how quickly the customer reported the fraud. For a third-party breach where neither the customer nor the issuer is at fault, reporting within three working days generally means zero liability.
“Reports made within four to seven working days attract capped liability, while later reports are governed by the issuer’s board-approved policy. If the issuer proves that the customer knowingly shared credentials, the customer may bear the loss incurred before reporting. After notification, further losses generally fall on the issuer,” says Karnani.
Provisional credit
A temporary credit or shadow reversal is a provisional refund of the disputed amount while the issuer investigates. The amount must be credited within 10 working days of reporting the fraud.
“The credit reduces the outstanding balance and restores the available credit limit by the same amount. Customers should check their next statement to ensure it has been applied. The credit becomes permanent if the issuer cannot establish customer negligence. If negligence is proved, the issuer may reverse it, making the customer liable for the amount,” says Karnani.
Track the issuer’s deadlines
The issuer must immediately acknowledge a complaint regarding an unauthorised transaction and provide a complaint number. It must provisionally credit the disputed amount within 10 working days, effective from the transaction date.
“The fraud complaint and customer liability must be decided within 90 days or sooner if the issuer’s policy requires it. Compensation must be paid under RBI’s customer-liability rules if liability remains undetermined after 90 days,” says Shankey Agrawal, partner, BMR Legal.
Protections during a pending dispute
Pay the undisputed amount in full by the due date. RBI prohibits charges on transactions disputed as fraud until the issuer resolves the dispute.
“Interest and late fees linked to transactions disputed as fraud should not accumulate during the investigation. The issuer must also withhold reporting a default relating to the disputed amount until the dispute is settled,” says Agrawal.
Recovery agents cannot intimidate or harass the customer while the investigation is underway.
The writer is a Delhi-based independent journalist
