Consumers’ Corner: Endless passwords have failed to serve their purpose. What next?

They are well meaning. Banks do want to protect themselves and their depositors and creditors from online fraud. But despite their best efforts, cases of online fraud seem to be on the rise; and if an in-depth cost-benefit analysis has been done, this does not seem to be available in the public domain. Regrettably, the response to bank fraud has been more like knee-jerk reactions.

The safeguards they prescribe stem from their belief that 100% safety can be ensured and determination not to allow a single case of fraud. In the process, they have tied themselves and their clients in knots and in never-ending security checks.

A brick house may look safe and the inmates proceed on a vacation after locking it up. But when the house is burgled, the next time a security guard is appointed. But on return they still find articles missing. A Security system is then installed. Then a detective is appointed to check on the security guard and the security system. Finally, they decide to forgo their vacation but are shocked to find the house burgled despite their presence. The online banking system is replicating the house owner.

PASSWORDS: It started with a password to log into your account.

It was then made supposedly stronger with a combination of capital letters, numbers, special characters and what not; every bank follows its own brand of madness. But even strong passwords proved inadequate to protect customers.

So, with some prodding from software companies, another layer of security was added with a Transaction Password. But if the software doubts you are the real customer, it may well ask “Which was the first car you bought?” and similar mind-boggling questions by way of additional security checks.

When online frauds persisted, banks put a fence around online transactions with the help of One time Password (OTP) but you are supposed to obtain it multiple times in order to do each transaction. No OTP for multiple transactions, see.

So, if your mobile phone is misplaced or giving you trouble, or if you are outside your home but without your mobile, or if your mobile is misplaced, stolen or is under repair, you are incapacitated as you cannot do any online payment even in emergencies. There is no standby arrangement by which the OTP is simultaneously sent to the registered email also.

To add fuel to the fire, TRAI has changed the template for sending Bulk SMSs and it was reported in newspapers that many banks including the SBI and HDFC Bank, were not ready with the new templates, resulting in delays and non-receipt of OTPs by customers.

This is a fit case for consumer associations to file a class action suit in consumer forums against TRAI, RBI and the Banks for failing their customers. Consumer Courts may however take years to resolve the disputes, making themselves liable for legal action.

Even with the OTP system, there are frauds, so we do not know what is next in line. Perhaps we will be asked to register two mobile phone numbers with banks and enter two OTPs to carry out a payment! If that fails to work, the Bank may send their representatives to personally confirm from the customer about the transaction to ensure ‘ease of doing business’.

But if you choose to make payments from your Bank account by using your debit or credit card and a Digital Wallet and online Payment system like Google Pay, you can avoid all the layers of security as you are only required to enter your PIN!!

The ingenuity of RBI of course knows no bounds. It issued guidelines to banks to exclude lease deeds on stamped paper as proof of change of address under KYC norms for individual customers. RBI does not even recognise Passbooks with address and photo issued by public sector banks.

But the same documents are accepted by the Government of India for change of address in Passport, Aadhaar card, LPG connections... So, you have to produce your Passport or Aadhaar number to banks to change the address.

(The writer is a Bengaluru based Chartered Accountant)

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