When barter was prevalent, it was not easy for a person to commit fraud because the ownership of goods was properly established. Thereafter, the era of paper currency came and money became anonymous and easily transportable. This had created paradise like state for fraudsters. But with the invention of credit card this state of anonymity could not remain any more.

With the advent of internet, significant opportunities have been recognized by cyber criminals to commit online frauds. The internet enables them to operate across international boundaries and use multiple aliases. Internet related fraud is certainly a matter of concern, and authorities around the world are active in combating a range of illegal activities being conducted over the internet.

One of the most widely publicized cases of credit card fraud occurred in the US , where a group of web-based companies made small, recurrent charges to hundreds of thousands of credit cards. Although this fraud does not have an e-commerce connection, experts do not believe the crooks obtained the card details on the internet, but instead think that they used software programs to generate valid credit card numbers out of thin air. Since each charge only involved a small amount of money (US $20), bank's processing and transactions did not subject them to full authorization check that would have highlighted the fact that card numbers had been software generated.

The Internet is the perfect environment for every crook, thief, and pickpocket to ply their trade with almost complete anonymity. Being in the online software business, a tremendous increase has been seen in fraudulent purchases made with stolen credit card information. In many cases, the thief has more complete and current information about the actual cardholder than the credit card company. In some cases, credit card numbers that receive an approval number turn out to be totally fictitious numbers -- based on the algorithm used to produce authentic numbers.

In the online environment, though awareness can minimize the credit card frauds but it can not stop the same. Most of the online credit card frauds are being committed by hackers who are instrumental in hacking the cardholders' information from the database of a company and using the same for purchases around the world.

Though, in United States the maximum liability of a cardholder for unauthorized transactions through credit cards is limited to $50. But there is no such law in India which can protect the credit cardholders from the clutches of online fraudsters. The cardholder is duly bound to pay the issuer of the card. Though some issuers are providing insurance to the goods purchased through credit card but the transaction is not itself insured.

Online Credit Card Offence & Indian Law

So far as Indian legal position is concerned, any offence pertaining to online payment through credit cads will come within the purview of Information Technology Act, 2000 read with relevant provisions of Indian Penal Code, 1860. Section 378 of the Code defines the term “theft” as follows:

“Whoever intends to take dishonestly, any property, out of the possession of any person without the consent of that person moves the property in order to such taking, is said to commit theft.”

In order to commit theft following elements are required to be satisfied:

(a) The intention must be dishonest.

(b) Such property must be movable in nature.

(c) Such property must be taken out of the possession of its owner.

(d) Such property must be taken without the consent of the owner.

(e) Such property must be removed from its original place to another.

Now we have to examine whether online credit card theft satisfies the abovementioned requirements in order to book the offender to justice. This definition, if interpreted in strict sense, does not include the online theft of credit card information. But, if a merchant dishonestly obtains the blank purchase slip and forges the signature of the cardholder's signatures on it and thereafter obtains the payment from bank, he can be booked under the offence of forgery.

Hacking has become an important tool in the hand of cyber criminals to take away the confidential information relating to credit cards and use it illegally for their personal advantage i.e. purchasing goods or online transaction of money etc.

To deal with this menace, our Parliament has been enacted the Information Technology in the year 2000. Following penal provisions of this statute are relevant to mention here.

Section 66 - This section provides the following penalties for hacking with computer systems:

(1) Whoever with the intent to cause or knowing that he is likely to cause wrongful loss or damage to the public or any person destroys or deletes or alters any information residing in a computer resource or diminishes its value or utility or affects it injuriously by any means, commits hack.

(2) Whoever commits hacking shall be punished with imprisonment up to three years, or with fine which may extend up to two lakh rupees, or with both.

The offence under this Section is cognizable and non-bailable.

Section 43 - Clauses (a), (b) and (g) of Section 43 state that if a person unauthorizedly access or secure access to computer, computer system, computer network or downloads copies or extracts any data from such computer, computer system, computer network or even assists another person to facilitate access in the aforesaid manner respectively, he shall be liable to pay damages by way of compensation not exceeding one crore rupees to the person so affected.

It is quite apparent from the above that besides legal protection it is necessary to carefully examine the technological and contractual protection existing within the system because law is not an alternative to other security measures required to be taken by the cardholder while making online payment.