Saturday, January 15, 2011

Fine prints of Kotak Credit Card

Lets admit it. Most of us tend to skim over the terms and conditions of most products and services. Credit card is no exception

So here is a look into the Terms and Conditions of Kotak Credit Card

Before we go into the details, let me at the outset say that I am happy with the way Kotak explains the free revolving credit period and how the interest and charges are computed. The first half of the document is a layman's explanation of the legal statements in the second half. But read on to check as to how the bank blames everything on the customer and tries to get away with it

"No statement will be generated and sent to you for the period in which there has been outstanding due less than or equal to Rs.100 and no transaction on the Card Account"

Cost saving is understandable here

" Non-receipt of statement would not affect your obligations and liabilities under the Cardholder Agreement and you shall be liable to settle at least the Minimum Amount Due before the payment due date"

They absolve of all responsibility. Its the customer's headache if the company doesn't send the account statement

" The Bank also reserves the right to introduce any new fees or charges, as it may deem appropriate, with due intimation to you"

We can entice you to join with good teasing offers. And a few months later, tack on additional charges because customers usually bear with it rather than take the effort to switch to another credit card company

"The Bank may suspend or terminate the Credit Card facility immediately at any time at its discretion or may at any time restrict the use of the Credit Card facility without prior notice if the Bank reasonably believes it necessary for business or security reasons. In the event of Bank terminating the Credit Card facility, all amounts outstanding on the Card Account (including Charges or Cash advances not yet debited) will become due and payable immediately. In such case, the Bank has the Cardholder‟s express authority to debit the card accounts for all withdrawals / transfers affected by the use of Credit Card / PIN as per the Bank‟s records, which shall be conclusive and binding."

If customer needs to close the card, they should send a written letter to the bank requesting the same. But the company can decide to close the account without assigning any reason ( refer to the clause "for business" ) and they don't even need to give a notice for the same. And to top it all, they will ignore the usual credit period and debit immediately from the bank account. It's one more reason, not to give standing instructions with bank to pay credit card bills ( for that matter any bills )

"The Cardholder shall report the loss of the Card to the Bank by calling the 24 hour Customer Contact Centre immediately on such loss or theft or misplacement. The Bank at the request of the Cardholder will attempt to deactivate the card immediately to prevent misuse"

So if we lose our card and so call up the customer care no, they cannot guarantee that they can block it. They will only "attempt" to deactivate it. And if there is a problem in their system, till they can actually do so, all misuse will be borne by the customer

"No liability shall accrue upon the Cardholder for any unauthorized transactions done on the Card from the time such Card has been reported lost/stolen/damaged and upon the Bank having suspended the Card Account"

Note the responsibility is not just till we report the card loss but till the bank actually suspends it. Funny thing is that if the bank decides that we aren't getting them enough profit ( say we pay our bills on time ), they reserve the right to cancel it immediately. But if the card is lost and someone else is using it, they wont promise to block it immediately when reported !

The Cardholder shall then send the following documents to the Bank:
All other documents as required by the Bank and to the satisfaction
of the Bank

All open ended requirements which would allow the bank to wiggle away from their responsibility

" The Bank is not liable or responsible for any transactions incurred on the Card
Account prior to the time of reporting of the loss of card to the Bank and the
Cardholder shall be wholly liable for the same.
- The Cardholder will, however be liable for all losses when someone obtains
and misuses the Card or PIN with / without Cardholder‟s consent, or consent of
an Add-On Cardholder"

Nice contradictory statements. Initially they say that if we lose our card, the responsibility is till we report to the bank. Then they go on to say that if "someone obtains the card without cardholder's consent" ( which is nothing but another phrase for lost/stolen card ) then the cardholder is liable for "all losses" ( even after reporting )

"If the Cardholder has acted fraudulently or acts without reasonable care, the Cardholder will be liable for all losses"

Why isnt there a statement saying that if the "Bank acts without reasonable care, then the Bank will be liable for all losses? The sad reality is that, I can pick holes in the website of most major banks these days and I am not even a IT security expert

"The Cardholder hereby agrees that the information furnished by the Cardholder in the application or otherwise may be further used by the Bank for marketing purposes to sell Card related offers, including but not limited to balance transfer, EMI of fers, cashrelated offers, insurance products, etc. from time to time. Further, the Bank may use this information to market other products of the Bank from time to time in conformity with the disclosure norms as applicable."

So the bank can decide to use our personal information to send out spam emails/letters and we don't have the right to say no to it

"9.1 The Cardholder can use the Card to pay for charges incurred for transactions conducted by the Cardholder at PMEs / through Electronic Media in India and abroad accepting Visa Cards as the case may be. The Bank and PMEs reserve the right at anytime to refuse without any notice to permit the use of the card at the PME for any reason whatsoever. The Bank accepts no responsibility for any such refusal to honour the Card.
9.2 The Bank reserves the right to approve, refer and decline any transaction without assigning any reason whatsoever"

We go out with our friends for dinner and when the time comes to paying for it, the bank can decide to decline our transaction for any or no reason and they are not to be blamed for embarrassing us

"A Sales Slip with the bonafide signature of the Cardholder together with the Card number noted thereon shall be conclusive evidence as between the Bank and the Cardholder as to the extent of liability incurred by the Cardholder. Any Sales Slip not personally signed by the Cardholder shall be deemed to be an authorized Transaction and the Cardholder shall be liable for the same"

While the first statement is innocuous, notice the second statement. Even if the charge slip / sales slip is not signed, it is deemed as authorized transaction !! The lawyer and the financial guy who jointly came up with this, deserves a promotion

"The Cardholder acknowledges that the Bank shall be under no liability whatsoever to the
Cardholder, in respect of any loss or damage arising directly or indirectly out of:
(iii) Effecting Transaction instructions other than by a Cardholder, or misuse of Card due to the Cardholder‟s negligence, mistake, dishonesty, misconduct, fraud or handing over the Card to any person;
(ix) Any misstatement, misrepresentation, error or omission in any details disclosed by the Bank or its agents or representatives"

The bank can effect a transaction instruction from any third person?
They can lie about any offer, details of the scheme, they can do any fraudulent stuff and get away with it because of the clause (ix). At least thats what they are attempting to do. And notice that if we make an error in filling the application form ( say date of birth ), then we will be liable, marked as default and shared with all financial institutions as can be seen below:

"18.1 The occurrence of any of the under mentioned following events (herein referred to as “Events of Default”) shall be deemed and shall qualify as an Event of Default:
If any representation made by the Cardholder or given to the Bank in the Card
Application or otherwise proves to be incorrect, misleading, false, fraudulent or incomplete, including, but not limited to income and/or identification paper/documents
forwarded to the Bank;"


"The Bank reserves the right to revise policies, features and benefits offered on the Card and alter these Terms and Conditions from time to time and may notify the Cardholder of any such alterations in any manner it thinks appropriate."

Yeah. The effort you spent in carefully reading the terms and conditions may not matter too much when they reserve the right to toss this out and use a new T&C with/without notification in a manner they "think" is appropriate

" Electronic Banking is permitted only after authentication of the Cardholder by means of Password/ PIN/ User ID or other identifiers of the Cardholder as stipulated by the Bank. The Cardholder hereby grants express authority to the Bank for carrying out any Transaction received by the Bank through Alternate Channels (using his Password/ PIN/ User ID), post authentication and the same will be deemed to have emanated from such Cardholder. The Bank shall have no obligation to verify the authenticity of any Transaction request received through Alternate Channels or purporting to have been sent by the Cardholder other than by means of verification of the Password/PIN /User ID. The Bank will not be liable for acting in good faith on such instructions"

Since when did folks start using "user id" as sufficient for authentication and authorization? Let alone two factor authentication, this Bank don't guarantee even a single factor authentication

" Only the Bank's own record of Transactions over Alternate Channels maintained through computer systems or otherwise shall be accepted by the Bank as conclusive and shall be binding on the Bank and the Cardholder for all purposes and the Cardholder recognizes, undertakes and agrees to accept such record of the Bank without demur or protest. Due to inherent features of some of Alternate Channels, the Cardholder may be able to take out a print of the Transaction attempted to be effected by the Cardholder over Alternate Channels. However, only the record maintained by the Bank shall prevail. The Cardholder unconditionally acknowledges and agrees not to contest any Transaction carried out or not carried out by the Bank upon requesting for the same over Alternate Channel"

Even if you have proof to the contrary, you are forced to accept the "words" of the Bank

"The Cardholder represents and warrants that he has a complete working knowledge of computers/electronic machinery, e-mail and the Internet, which will enable Cardholder to avail the Internet Banking"

Even after 8 years in the field of software engineering, I still can't claim to have "complete working knowledge of computers/electronic machinery". Do they really expect doctors, lawyers, musicians to be aware of it?

Thursday, January 06, 2011

BCCI and broadcast rights

Why? Why? Why?

Why grant license to just one TV channel in India? This has led to broadcast quality deteriorating so much that we are encountering the following:

1) Channels switch to advertisement even before the final ball of the over is dead. Why can't they let us savor the roar of the audience of a nice shot or a wicket going down?

2) Advertisement are overlayed on the live cricket feed. Sometimes these are shown as panels which takes about 20% of the screen.

3) Overlaying ads sometimes include audio at the expense of cricket commentary

4) The full advertisements that come in between overs, have higher volume than the actual cricket feed. So after every over, one is forced to either reach for the remote or learn to tolerate it

Here is what is required from them

1) Conduct auction and grant distribution rights to four different categories ( two in each for a total of 8 licenses

a) paid tv channels
b) free tv channels
c) paid online video feeds
d) free online video feeds

The paid tv channels will have to compete aginst free tv channels by providing more value added services. They could be less ads or better video quality ( say 1080 HD ) or their own chosen expert commentators etc. This ensures that we have a good reach and do not relegate cricket to only those who subscribe to pay channels. Also healthy competition can be a win-win for everyone ( as long as we don't allow cartels )

2) Ensure that the distribution rights are re-auctioned after every year rather than 5 years.

3) Lay down clear mandatory terms and conditions for the distribution license

a) At any given instant, broadcasters can show ad or cricket but not both. Overlay kills the experience of watching a cricket match

b) Ensure that the average volume of the cricket feed and the advertisements should remain the same

c) No ads till the ball is dead

4) Grant permission to the broadcasters to replace the commentary stream with their own commentator's audio feed. This can help them differentiate, if they chose to. Same goes for pre and post match briefings and analysis

Today the broadcasters care only about the bottom line and to be fair, rightfully so. So it is in the best interest of BCCI as care takers and promoters of cricket in India, to balance revenue with quality and public benefit

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