1 week ago
Kangra Consumer Commission orders banks to compensate cyber-fraud victim
A man’s money was stolen from his bank account through cyber fraud.
The theft happened on October 13, 2023.
He told his bank within one day and also contacted the police and the cybercrime reporting portal.
Some of the money was frozen and returned, but Rs 1.39 lakh was still missing.
The commission said the man had reported the fraud quickly enough under RBI rules.
It found that his bank did not promptly tell the other bank to freeze the recipient account.
It also said the other bank did not keep complete identity documents for the account holder.
Both banks were ordered to pay the missing money and additional costs.
A man lost Rs 2.02 lakh in a cyber fraud on October 13, 2023.
He reported the unauthorised transactions to State Bank of India within 24 hours.
Rs 62,131 was frozen and returned, but Rs 1.39 lakh remained unrecovered.
The commission held both banks responsible for delayed action and deficient KYC verification.
The banks must jointly pay Rs 1.39 lakh, plus Rs 25,000 compensation and Rs 10,000 in litigation costs.
- Who
- A cyber-fraud victim, State Bank of India, and a private bank connected to the recipient account.
- What
- The Kangra District Consumer Commission ordered both banks to jointly pay Rs 1.74 lakh over unrecovered cyber-fraud losses, compensation, and litigation costs.
- Where
- The case was decided by the Kangra District Consumer Commission in Himachal Pradesh; the money was transferred to a recipient bank account.
- When
- The fraudulent transfer occurred on October 13, 2023; the commission’s order date is not stated.
- Why
- The commission found delayed communication to freeze the recipient account and deficiencies in the recipient’s KYC records.
Consumer Commission’s findings
Banks’ defenses
Responsibility for unrecovered funds
Consumer Commission’s findings
The commission held both banks responsible, saying the remitting bank did not promptly communicate the fraud and the recipient bank maintained deficient KYC records.
Banks’ defenses
The public-sector bank said it followed standard procedure, while the private bank argued that the victim was not its customer and that liability applied only in cases of system failure or bank negligence.
Freezing the recipient account
Consumer Commission’s findings
The commission said the absence of email correspondence from the remitting bank supported the presumption that it had not acted promptly, giving the fraudster time to withdraw funds.
Banks’ defenses
The banks denied liability; the articles do not report a separate detailed explanation from either bank specifically addressing the missing funds.
Customer liability in remote-access fraud
Consumer Commission’s findings
The commission said social-engineering and remote-access-app frauds do not automatically prove that customers voluntarily or intentionally shared their banking credentials, especially when fraud is promptly reported.
Banks’ defenses
The banks disputed liability generally, but the articles do not provide a specific counterargument to this finding.
Key facts
- Fraudulent transfer
- Rs 2.02 lakh was transferred to an account held in the name of Mastufa Ali.
- Reported
- The victim reported the fraud to his bank within 24 hours.
- Recovered amount
- Rs 62,131 was frozen and later released to the victim following a Judicial Magistrate’s order.
- Unrecovered amount
- Rs 1.39 lakh could not be recovered.
- Total ordered payment
- Rs 1.74 lakh, comprising Rs 1.39 lakh, Rs 25,000 compensation, and Rs 10,000 litigation costs.
- Applicable framework
- The commission applied the Reserve Bank of India’s zero-liability framework and cited the 72-hour reporting period.
- KYC deficiency
- The private bank produced only a photocopy of the account holder’s Aadhaar card, not the PAN card, residence proof, or complete KYC records.
Quotes
Kangra District Consumer Commission
Consumer disputes commission that adjudicated the cyber-fraud compensation case
“The private bank failed to produce the PAN card, Aadhaar Card, and residence proof of the account holder/fraudster; only a photocopy of the Aadhaar card was produced. These details are essential, and the opening of such an account by a fraudster and the non-production of essential documents by the bank clearly establish that they committed a deficiency in service.”
indianexpress.com
Sources
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