Can You Recover Money Lost in Unauthorized Card Transactions in the UAE?

Maryam Pervez -

Unauthorized transactions on your credit card can be alarming, especially when you've taken precautions to protect your financial information. In the UAE, there are legal protections in place that may help you recover lost funds, provided the loss wasn't due to your own negligence.

Question: I recently discovered unauthorized purchases made with my credit card, which I promptly blocked. When I contacted my bank, they suggested that I might have unknowingly entered my card details on a fraudulent website. I’m always cautious about where I enter my card information, so I’m concerned. Is the bank responsible for reimbursing the money I lost, given that the loss wasn’t due to any negligence on my part?

Answer: Unauthorized use of credit cards due to hacking or fraudulent activities is a serious criminal offense in the UAE, with penalties including imprisonment and fines of up to Dh2 million. According to Article 15 of the Federal Decree Law No. 34 of 2021 on Countering Rumors and Cybercrimes, individuals or groups involved in hacking e-payment systems, cloning cards, or using payment information without authorization face severe legal consequences.

Financial institutions in the UAE are also required to protect their customers against financial crimes. As outlined in the Consumer Protection Regulations issued by the Central Bank of UAE (Circular No. 8 of 2020), banks must:

  1. Educate consumers about the risks of financial crimes (Clause 6.2.2.6).
  2. Maintain and update robust cybersecurity systems to prevent such incidents (Clause 6.2.2.5).

Furthermore, financial institutions are obligated to compensate customers for financial losses resulting from crimes like cyberattacks, unless it can be proven that the loss was due to the customer's gross negligence or fraudulent behavior (Clause 6.2.2.4).

Given your diligence in safeguarding your card details, the bank may indeed be liable to compensate you for the unauthorized transactions. You should:

  1. File a formal complaint with your bank, detailing the incident.
  2. Provide evidence that the unauthorized transactions were not due to your negligence.
  3. File a police report and submit all relevant transaction details and evidence.

If the bank's investigation does not yield a satisfactory outcome, you can escalate your complaint to the Central Bank of UAE, which oversees the enforcement of consumer protection regulations in the financial sector.

In summary, if you can demonstrate that you were not negligent, the bank may be required to reimburse you for the lost funds.

News Source: Khaleej Times