Under the Reserve Bank of India's framework, customers face zero liability for third-party breaches if they report unauthorized UPI debits within three working days. Financial institutions must issue provisional credit within 10 working days for eligible claims and resolve the complaints within 90 days. Even when credentials like a UPI PIN or OTP are compromised, banks cannot automatically dismiss claims if underlying system failures or security lapses contributed to the fraud.
Key points
Customers retain zero liability for third-party payment breaches if the incident is repor…: Customers retain zero liability for third-party payment breaches if the incident is reported within three home branch working days.
If a user shares credentials like an OTP or UPI PIN, they generally bear losses until the…: If a user shares credentials like an OTP or UPI PIN, they generally bear losses until the incident is formally flagged.
Banks cannot reject unauthorized transaction claims purely because credentials were enter…: Banks cannot reject unauthorized transaction claims purely because credentials were entered if institutional security failures contributed to the breach.
Sources checked by our analysis pipeline: 1
A UPI fraud can drain a bank account in minutes. A scammer posing as a bank official, a fake customer-care number, a fraudulent payment request or a screen-sharing app can trick a person into losing money before they even notice it.
But losing money to a UPI scam does not automatically mean the customer has to bear the entire loss. The Reserve Bank of India (RBI) has a framework that protects customers against unauthorised electronic banking transactions. In certain cases, customers can even have zero liability.
However, the protection depends on how the fraud happened, whether the customer shared their credentials or approved the transaction, and how quickly the bank was informed.
So, if money has been fraudulently debited from your account, what should you do first? When is the bank required to compensate you, and what can you do if it refuses to refund the money?
UPI fraud: Does your bank have to refund the money?
The first thing to understand is that not every UPI scam is treated as an unauthorised transaction under RBI's customer protection framework.
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