Credit Card Consumer Rights: A must know for every credit card user

Many credit card holders come across instances where they feel their credit card consumer rights have been infringed. Although getting a credit card is relatively easy, many credit card holders are unaware of the consumer rights they are entitled to when they fill out the paperwork to get a credit card. Many are in a dilemma about what to do next and struggle to find the right resources to guide them.

With the coronavirus pandemic propelling the rampant use of touchless and online modes of payment like credit cards, the instances of credit card fraud and misuse of credit card holder’s information have grown manifolds. Online credit and debit card frauds have risen 225% between 2019 and 2020.

Thankfully, there are several laws and RBI regulations that protect the rights of credit cardholders. These credit card consumer rights will help you navigate through cases of wrongful billing, privacy breaches, credit card fraud, and discrepant transactions, among many other instances.

This makes it even more critical for credit cardholders to know their rights and protect themselves from privacy breaches, cyberattacks, OTP frauds, and other instances where their credit card consumer rights might be compromised.

This blog will explore the top 7 credit card consumer rights every credit card holder must know to safeguard their interests in case of a breach.

7 credit card consumer rights you must know

1. Right to privacy

As per the norms of the RBI, banks and NBFCs are not permitted to issue unsolicited credit cards to individuals without their active consent. The RBI protects the consumer's rights by ensuring that the banks and NBFCs reverse all the charges issued on unsolicited credit cards. The RBI also holds them accountable by charging them a penalty fee that is twice the value of the charges reversed.

Similarly, banks and NBFCs are prohibited from issuing unsolicited credit or loan products to their existing credit card customers to protect the customers’ privacy. The credit product issuing institution will be penalized in such a case.

The RBI also mandates that when a bank or an NBFC offers an upgrade on the credit card or enhances the credit limit, you will first be informed about it along with the terms and conditions. After you have consented, the bank can upgrade the credit card or increase the credit limit.

The banks and NBFCs must follow the Do Not Call Registry (DNCR), which contains the contact numbers of customers and non-customers who have consented to not receiving any marketing SMS or calls from the bank/NBFC. The banks and NBFCs must respect the individual’s privacy as per their DNCR consent and ensure that the contact number is not passed on to third parties or unauthorized personnel for solicitation or misuse.

2. Fair practices for credit card debt collection

RBI mandates that the banks and NBFCs must not resort to violence, threats, harassment, or intimidation for debt collection. Any verbal or physical harassment against any person (customer or their kin) is prohibited. Any acts by the banks, NBFCs, or their agents that violate the customer's privacy or humiliate them are strictly prohibited by the RBI. This is one of the fundamental credit card consumer rights granted to credit card holders by the RBI.

3. Fair and timely billing

Although banks and NBFCs ensure that the credit card bills and statements generated are as accurate as possible, there may be instances where customers object to a bill. Banks and NBFCs are not allowed to issue unfair bills to the customers. However, if a customer feels that a credit card bill sent to them is wrong and inaccurate, they can demand an explanation from the bank.

In such a case, the bank will have to explain the billed items, including necessary documents, within 60 days to address the customer’s issue.

The banks and NBFCs have to ensure that the credit card bills, once generated, are sent to the credit card holder as soon as possible. This provides the credit card holder ample time to repay the card dues without defaulting. Ideally, banks and NBFCs have a due repayment date of 21 to 25 days after one billing cycle has ended and the cardholder has sent the statement.

4. Confidentiality

To protect the identity of the customer and maintain confidentiality, the banks and NBFCs are not permitted to reveal any information about the customers they receive from them at the time of opening the account or issuing the card. If the banks and NBFCs are giving out the customer’s information to third parties, due consent from the customer must be obtained and informing them about how the third-party organization is using the information.

Customers must know that the banks and NBFCs can report the status of a credit card holder as a defaulter only by informing the credit card holder about it. After this has been communicated to them, the customers must know that they have a notice period during which they can settle their dues without being termed a defaulter.

To respect confidentiality clauses, banks and NBFCs may release the information of a credit card holder defaulting on their payments only after a due process is followed. The credit card consumer rights also ensure that the information furnished by a customer (income, employment history, status, address, credit history, etc.) cannot be transferred or misused for marketing purposes.

5. Resolution of disputed credit card transactions

You may often have to get a credit card transaction reversed due to reasons like incorrect debits, faulty PoS machine, incorrect fees, a charge you do not remember making, non-delivery of the goods, etc. In such cases, the issue can be raised with the card issuer, terming it a ‘disputed credit card transaction’.

After escalating it with the issuing authority’s customer care team, the customer has to fill out a form for an investigation into the transaction and attach relevant documents that prove the transaction is incorrect. This can be done within 60 days of getting the credit card statement where the dispute was found.

However, customers can consider making the payment for the disputed transaction even when it is being investigated. If the result is in your favor, you will be issued a full refund. If the result is not in your favor and you have not made the payment before the due date, you may be levied interest on the amount due.

In the case of credit card fraud, there might arise a need to get the police involved for the discrepancies to be solved. The credit card consumer rights also give you the option to approach the Banking Ombudsman to choose the alternate dispute resolution mechanism if you are not getting the desired resolution to this disputed transaction.

6. Liabilities for credit card fraud before you receive the card

If your credit card has been misused even before receiving it from the issuing authority, you will not be responsible for fraudulent transactions. You will not be liable for the fraudulent transactions on your card before you receive the card, the PIN, and the welcome kit.

7. Protection against banks charging exorbitant interest

Banks and NBFCs are liable to charge a cardholder interest only when they have not paid their dues by the last repayment date. The customer must be informed about the Annualized Percentage Rates (APR) on credit cards. You will be explained APR calculation, interest, and late payment charges on the outstanding payment. Interest rates will be applicable on the amount due when you make a partial payment against the outstanding payment.

Apart from service charges and other taxes levied directly by the Government, the banks and NBFCs can’t levy any charge or interest without it being communicated to you as a cardholder. The banks and NBFCs must inform the customers about any change in the interest rates at least one month in advance. The banks or NBFCs cannot charge a fee if a cardholder wants to surrender their card.

The takeaway

Credit card consumer rights have been put in place for you to know how to protect yourself from being exploited. When you know your rights as a credit cardholder, you will have handy remedies to help you wade through tricky situations with credit card companies and third-party stakeholders. Getting a credit card may seem quite hassle-free, especially with IndiaLends. However, you also need to educate yourself about the rights you gain along with a credit card.