Adv. For the Complainant’s: - Radha Kanta Mahakur and Others
Adv. For OPS :- Asit Kumar Sarangi
Date of filing of the Case :- 23.08.2023
Date of Order :- 11.03.2024
JUDGMENT
Fact of the case in nut shell-
1.The complainant has availed a Flipcart Axis bank credit card vide account No.5334670012045791 On dt. 13.12.2022 the wallet of the complainant containing the credit card of Axis Bank with one debit card of Scotia Bank Canada, the pan card, D. L voter ID etc. were stolen by unknown thief . After noticing theft immediately the complainant reported the theft of credit card to Axis Bank on the same date at about 9.44 P.M over phone to Axis Bank toll free number Canada 18554360726 and also mailed the matter to Axis Bank on dt. 13.12.2022.
After theft of the credit card Flipcart Axis Bank , multiple fraudulent purchase transaction were made in departmental store of wall mart by using the credit card for a total amount of Rs.2,25,316/- vide transaction no 3460316557 It was also found that out of the same theft incident another found transaction was made by using the stolen debit card of Scotia Bank for an amount of 1010CAD Canadian dollar Immediately the complainant has lodged a police complaint to Canadian police CAFC ( Central Anti fraud de Canada) on dt.14.12.2022 vide ref. No 2022- 9311 on dt.18.12.2022 the complainant had also gave information to the cyber crime vide A.D. no. 22412220011039 on dt. 18.12.2022. The Canadian police investigated the matter submitted the final form, mentioning that unknown suspect stole his wallet and used his card for fraudulent activities , Basing upon that report the Scotia Bank had revert back the lost CAD of 1010 Dollar vide Scotia Bank Statement Dt.24.12.2022 to 27.12.2022.
The complainant mailed several E- mail to follow the matter with Axis Bank in between 18.12.2022 till 01.03.2023 there was no positive response from the side of the Axis Bank rather without solving the complaint indulge in illegal deduction of Rs.1,33,024/- The complainant had made a final request to the nodal office of axis bank vide e- maildt.26.05.2023 there was no response from the side of the Axis Bank. Hence this case.
2.To substantiate his case the complainant relied on the following documents
1. Axis toll no Canada Annexture-1
2. Service request No. SAK 000013676240 Annexture-2
3. Flipcart Axis Bank Credit card Statement. 2. Nos Annexture-3
4. CAFC reporting System receipt complain reference No. 2022-93971 dt.
18.12.2022 Annexture-4
5. Cyber crime incident 2 Nos annexture-5
6. day to day Banking Statement of Scotia Bank 2 Nos. annexture-6
7. R.B.I. Guide Line of July 6/2017 Annexture-7
3. Having gone through the complaint and it’s accompanied documents. Perusal of the records and on hearing the complainant prima facie seems to be a genuine case hence admitted and notice to the Ops were served and in response they appeared through their councel and filed their written version.
4. In rival contention the Ops denied with all allegation and give importance on the terms and conditions of Axis Bank card member, where in 19.4 column it is stated that you are responsible for the security of the card and shall take all steps towards ensuring the safe keeping thereof and the Bank shall not in any manner be liable for any misuse of the card. In the event the Bank determines that the aforementioned steps are questionable, financial liability on the lost or stolen card would rest with you and could even result in the cancellation of the card account.
As such the Bank is not liable for the same. The disputed transactions are secured “POS” transaction done through PIN password. Transaction has been done using the card of the complainant’s card credentials and authenticated through PIN password. These are search transactions and the same cannot be done unless the person is in possession of credential of the credit card, which are confidential in nature and known only to the card holder unless the card holder divulges the same to a third party. Hence the complaint case be dismissed in limine.
The Ops relied on the card member agreement of Axis Bank marked as Annexture-1
5. Before adjudicating the matter in hand we frame certain issues for consideration which are as follows.
Issue No.1 – whether the Ops are exempted from the deficiency of service if not why?
Issue No.2- is the complainant deserves any remedies or burden with contractual liability?
Issue No-1 The complainant residing at Canada when the wallet was stolen containing many valuable documents including the Flipcart Axis Bank credit card along with a Debit card of Scotia Bank Canada.
Now in this digital age the commercial Banks push the customer to deal cashless transaction but this transaction is sweeter than honey when functioning well but when it is troubleshooter it is hazardous for the customers. For this R.B.I has issued guideline RBI/2017 18/15 dated July 6 2017, circulate all the commercial Banks including RRBS, all small Finance Banks and payment Banks to follow the guideline strictly. We have to recapitulate what RBI guideline says about reporting of unauthorized transactions by customers to Bank, which elaborately discuss in point no.5 as follows.
Point No.5- Banks must asks their customers to mandatorily register or SMS alerts and when ever available register for e-mail alerts for electronic shall mandatorily be sent to the customer must be advised to notify their Bank of any unauthorized transaction, and informed that the longer the time taken to notify the Bank, the higher will be the risk of loss to the Bank as well as to the customer. To facilitate this Banks must provide customers with 24 x 7 access through multiple channels (at a minimum via website, phone Banking SMS,E-mail IVR, a dedicated toll – free help line reporting to home branch etc.) for reporting unauthorized transactions that have taken place and /or loss or payment instrument such as card etc.
Banks shall also enable customers to instantly respond by ‘ Reply’ to SMS and E-mail alerts and the customers should not be required to search for a web page or an @ mail address to notify the objection if any further , a direct link or lodging the complaints with specific option to report unauthorized electronic transaction. Shall be provided by Banks on home page of their website. The loss/Fraud reporting system also ensure that immediate response ( including auto response) is sent to the customers. Acknowledging the complaint along with the registered complaint number. The communication systems used by Banks to send, alerts and receive their responses there to must record the time and date of delivery of the message and receipt of customers response if any to them this shall be important in determining the extent of a customers’ liability . The Banks may not offer facility of electronic transactions other than ATM cash withdrawals to customers who do not provide mobile numbers to the Bank. on receipt of rep[ort of an unauthorized transaction from the customer Banks must make immediate steps to prevent further unauthorized transaction in the account.
What is limited liability of a customer reflected on the RBI guideline in
Point no.6 and 7 as under it divided in to two parts
- Zero liability of a customer.
- Limited liability of a customer.
Point no.6
- Zero liability of a customer:-
A customer’s entitled to Zero liability shall arise where the unauthorized transaction occurs in the following events.
- Contributory fraud/negligence/deficiency on the part of the Bank ( imespective of whether or not the transaction is reported by the customer.)
- Third party breach where the deficiency lies neither with the Bank nor with the customer but lies elsewhere in the system and the customer
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notifies the Bank within three working days of receiving the communication from the Bank regarding the unauthorized transactions.
- Limited liability of a customer.
Point no.7- A customer shall be lible for the loss occurring due to unauthorized transactions in the following cases:-
- In cases where the loss is due to negligence by a customer such as where he has shared the payment credential the customer will bear the entire loss until he reports the unauthorized transaction of the Bank. Any loss occurring after the reporting of unauthorized transaction shall be borne by the Bank.
- In cases where the responsibility for the unauthorized electronic Banking transaction lies neither with the Bank nor with the customer but lies elsewhere in the system and when there is a delay (of four or seven working day) after receiving the communication on the part of the customer in notifying the Bank of such transaction the per transaction liability of the customer shall be limited to the transaction value or the amount mentioned point 12 of the RBI guideline states about the burden of proof. The burden of unauthorized electronic Banking transaction shall lie on the Bank.
It is pertinent to mention here that the customer should communicate to the Bank in any unauthorized transaction within 3 working days from the unauthorized transaction happened what says the card member agreement of Axis bank in point 19.1 it speaks about lost or stolen cards “ you must notify the Bank immediately in the even the card is lost/stolen not received or is being used without your permission In the case of such loss/ theft etc. you must notify the Bank in writing of such loss /theft etc. immediately after filing FIR the police complaint a copy of which must accompany the notice to the Bank. Pending written notice you may also inform the Bank telephonically of such/ loss theft etc. the Bank will upon adequate
verification temporarily suspend the card account but will not be liable any inconvenience caused you on this account.
Point no 19.2 speaks “ your liability arising out of any unauthorized use of credit card prior to notice / communication to the bank shall be for all charges incurred till the notice communication to the bank and shall be nil only after receipt of notice by the Bank.
There are plethora of decisions given by the NCDRC as well as the apex court where online fraud loss to customer liability of the Bank to compensate in Pallabh Bhowmick Vrs. Ombudsman R.B.I India and others.
In Aliyal T.M Vrs. M/s SBI cards & payment service ltd by its M.D. where in the Judgment of Honorable Justice Mr.D.B. Suresh kumar in his Judgment determined the Banks is responsible and concluded that “ In short there is also no difficulty in holding that if a customer suffer loss in connection with the transaction made without his Junction by fraudsters, it has to be presumed that it is on account of the failure on the part of the Bank to put in place a system which prevents such withdrawals and the Banks are therefore liable for the loss caused to their customers. All over the world the courts are adopting the aforesaid approach to protect the interest of the customer’s of electronic Banking”.
So we observe that customers are not liable if the fault lies elsewhere in the system. Here in this case in hand the complainant’s card was stolen by unidentified thief. The complainant has acted in time i.e. within 3 working days communicate to the bank regarding theft by telephonically as well as in E-Mail by written communication the complainant immediate after the theft lodge & FIR to the Canadian police which also register and after registration the Canadian police refer it to the cyber crime shell known as CAFC . The Canadian police after submitting the final report “ an unknown suspect stole his wallet and used his card for fraudulent activities”. The Scotia Bank without any hesitation reverse the 1110 Canadian Dollars. There is no carelessness on the part of the complainant.
Banking transaction basing on good faith and believe. It is the duty and responsibility of the Banks that the heard earned money of the customer be secured and safe. The discrepancy in reporting date alleged by the Axis Bank is baseless full of surmises. The reporting of theft to Canadian peel police on December 14.2022 and the subsequent reference to CAFC (Canadian Anti Fraud Centre) on December 18/2022 via compliance reference no.2022-93971 which was as per the procedure of the Canadian police. The complainant made all his responsibility in time and from the final report it is confirm that the theft of credit card is true. The Bank must follow the guideline circulated by RBI strictly. The Op No.1 and 2 remained deficient in acting in time and failed to block the credit card of the complainant in time then the occasion of fraudulent/ false transaction would have not arisen where as the Ops without solving the problem deducted the amount fraudulent transaction i.e. Rs1,33,024/- in arbitrary manner and create unnecessary mental torture and agony to the complainant.
It is most worthy to mention here that the complainant cannot be held solely liable if theft resulted from negligence on the part of the Ops in ensuring the security of their service.
As such Ops are held liable for the loss sustain by the complainant. The Bank has unable to prove that the impugned fraudulent transaction had taken place due to the account holder’s fault for example loss of credit card the Bank shall be made liable for the unauthorized transactions as it is deemed that there was a security lapse in the electronic Banking system through which the transactions had taken place. Banks cannot rely on arbitrary terms and conditions to wriggle out of its liability towards the customer.
The Axis bank bears responsibility for the unauthorized transactions that occurred as a result of theft despite being promptly notified of the theft. The Ops failed to take adequate measures to prevent the series of fraudulent transaction resulting financial loss and mental distress to the complainant. Issued no.1 answered accordingly.
From the above facts and finding issue no 2 automatically answered. The complainant done his best effort towards communication to the Ops as well as the local police from which it is proved that there was a theft of the credit card which is out of the control of the complainant as such the complainant is exempted from contractual liability and succeeded towards the remedies of deficiency in service as provided by consumer protection Act 2019.
Sequel to the above discussion we consider our finding and view in favour of the complainant with the following directions.
ORDER
The Ops are directed to reverse the unauthorized transactions of Rs.2, 25,346/- @9% interest per annum, and the illegal deduction of Rs.1,33,024/- @9% within one month from the date of order.
Further the Ops are directed to pay Rs.50,000/- towards mental agony and Rs.5,000/-towards litigation expenses within one month from the date of order failing which the entire sum should be paid by the Ops @ 12 % interest per annum from the date of filing of the case till realization.
No award as to cost.
PRONOUNCED IN THE OPEN COMMISSION TODAY I.E DATED 11th DAY OF March ’2024
