Online Frauds: How To Protect Yourself by Setting Transaction Limits
Abhay Datar 01 August 2022
Almost every day, we read media reports about people losing money to a variety of financial frauds. Moneylife has been reporting these frauds extensively and warning people on how to protect themselves (check these links to be warned about frauds #FraudAlert – LINK). 
Here is a simple way to protect the bulk of your money if you fall victim to an online scam. You can do it by setting transaction limits on your cards and online banking transactions by evaluating your financial needs on a one-time basis. It will ensure that the amount of money withdrawn from your bank account or on your credit card is only within the limit set by you. 
Fraudsters usually work at luring people to part with their identification details required for fulfilling know-your-customer (KYC) requirements. They also con you into sharing one-time passwords (OTP) through scam calls, or worse, take control of your screen.
Basically, fraudsters aim to get all information required to misuse credit or debit cards by luring people to part with details. They do this by frightening people by masquerading as bank officers and threatening to block accounts or credit or debit cards for want of KYC information and then offer to guide them online to comply with the requirements. 
This is when they dupe people into parting with information that allows them to log into net banking accounts or even share OTPs. 
How many of us know that limits set for our debit and credit cards and online transactions play a vital role in deciding how much money can be siphoned out of our accounts by fraudsters? 
The higher the limit, the higher the loss.
Let us now understand various limits that can be set. You can set two types of limits: first, on the number of transactions, and second, the amount or size of a transaction. 
The first allows you to set the total number of transactions per day based on your usage – for instance, it can be four transactions per day on your debit card. 
The second option allows you to set the maximum amount that can be withdrawn or transferred from your card or account daily. Again, this depends on your personal spending pattern. You can set it up at anywhere between Rs25,000 to Rs1 lakh per day. Ideally, you should cap your overall transaction amount at a little higher than your usual payment requirements to provide for unforeseen contingencies.  
These limits are not independent but integrated with one another. So, if you have set your limits at Rs1 lakh and four transactions, you can make four transactions of Rs25,000 each or a single transaction of Rs1 lakh or any such combination on any given day.
Online banking software also allows us to set further limits and sub-limits also. 
To elaborate, if I want to transfer a certain amount to Mr XYZ online – say in a unified payment interface (UPI) or net banking transaction, I can add him as a beneficiary and go on to define whether I want to make a one-time payment to him or plan on a recurring transaction with a cap on the maximum limit of amount that can be transferred. 
This is ideal for making payments directly into the accounts of domestic help or transferring allowances to children, parents or dependents who may live in another city or for subscription payments like newspapers, etc. 
The same applies to debit and credit cards also. If you have a good credit score and monthly income, banks will try and lure you with a premium card or a gold or platinum card with significantly higher spending limits. While this is flattering, it also exposes you to a higher risk if you are a victim of fraud. So, it is ideal to set your limits based on your spending patterns and will usually be much lower than the default limits set by your card issuer or bank.
Most banks allow you to set default limits online. Some banks even facilitate setting a time slot during which no online banking transaction can take place. For example, if my routine starts at 9 in the morning and ends at 10 at night, I can set the time slot for 'no online banking' from 9.30pm to 9.30am, ensuring that your card simply cannot be misused while you are sleeping. 
Please check the various limits available to you and make it a point to re-set them as a one-time exercise to protect yourself and limit losses in case you become the victim of fraud. 
Please note that this is an overall concept and may differ from bank to bank, so you may like to contact your bank for help with the specific features on offer for you.  
Needless to add, this is not a guarantee against fraud because fraudsters are ingenious and always find new tricks to dupe people. The transaction limits circumscribe potential losses and establish you as a prudent customer when fighting for redress if the need should arise. 
(Abhay Datar is a consumer activist. After working at Bank of Baroda for about 29 years, he retired as IT Manager. After retirement, Mr Datar joined the Consumer Guidance Cell of Mumbai Grahak Panchayat (MGP) in 2008 and solved many cases related to banking, including online fraudulent transactions, misuse of credit cards and ATM cards. He was a Member of the Managing Committee of MGP till March 2021. Currently, he is an expert counsellor at Moneylife Foundation, helping consumers resolve issues related with banking and insurance.)
2 years ago
I would like to contact Mr Abhay Datar relating to my insurance claim.
Free Helpline
Legal Credit