South Mumbai District Commission Holds IndusInd Bank Liable For Failure To Communicate Terms Of Secondary Credit Card

Brief Facts:

The Complainant purchased an iPhone SE 16 GB Space Gray for his son-in-law for Rs. 38,000/-. Unistore (“Dealer”) offered an EMI facility of Rs. 1842.49/- for 24 months with an assured cashback of Rs. 6400/-. Relying on this assurance, the Complainant used his credit card issued by IndusInd Bank (“Bank”) for the purchase.

Despite making the EMI payments, the outstanding amount did not decrease. The Bank informed him that this amount was only the interest on the availed credit. Further, the Complainant was informed that his credit card did not qualify for the EMI facility, which was not mentioned at the time of purchase. To avoid further heavy interest, the Complainant ultimately paid Rs. 38,855/-.

The Complainant wrote to the Bank requesting a waiver of the interest. After further communication, the Dealer informed him via email that the Bank rejected the transaction because it involved a secondary credit card. The Complainant argued that the Bank and Unicorn engaged in unfair trade practices and provided deficient service. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, South Mumbai, Maharashtra (“District Commission”) against the Bank and the Dealer.

The Bank referred to the statements and indicated a minimum due payment of Rs. 1899.87/- with a due date of 01/11/2016. It argued that the Complainant paid only the minimum amount due and not the total outstanding dues which led to the balance being carried forward with additional interest and charges applied as per credit card rules. These charges were reflected in subsequent statements, which the Complainant continued to pay minimally. The Bank argued that due to the lack of information regarding the EMI terms from Unicorn, it continued to prepare statements based on the total purchase amount. The Complainant's request for an interest waiver was not accepted because he consistently paid only the minimum amount due instead of the entire outstanding amount.

On the other hand, the Dealer didn't appear before the District Commission for proceedings.

Observations by the District Commission:

The District Commission noted that the Bank provided conflicting reasons for the rejection. Initially, it claimed it was not informed about the EMI transaction, and later, it cited the use of a secondary card as the reason for the rejection. It noted that the Bank did not provide the terms and conditions related to the secondary credit card or explain why a secondary card could not be used for purchases and EMI instalments. The Complainant had informed the Bank about the EMI purchase in an email. The District Commission held that the lack of clear explanation and evidence from the Bank raised doubts about its reasons for rejecting the transaction.

Given that the Complainant had notified the Bank about the EMI purchase, the District Commission held that it was the duty of the Bank to process the transaction accordingly and convert it into an EMI plan. However, the Bank failed to do so and continued to charge interest, totalling INR 8,638/-. This constituted an unfair practice and a deficiency in service by the Bank.

Therefore, the District Commission directed the Bank to refund the amount of INR 8,638/- to the Complainant, with 9% interest. Additionally, due to the mental and physical suffering endured by the Complainant, and the loss of trust in using the credit card for future transactions, the bank was also directed to pay INR 5,000/- as compensation for mental agony and INR 5,000/- as litigation costs incurred by the Complainant.

Case Title: Mr Abdul Rashid Momin vs IndusInd Bank and Anr.

Case Number: 84/2017

Date of Order: 12/06/2024