Hamirpur District Commission Holds SBI Liable For Failure To Proactively Investigate Unauthorized Transactions And Freeze Account

Brief Facts:

The Complainant received a phone call informing him that his JIO SIM card services were at risk of termination. To purportedly continue the services, he was directed to a link where he entered his ATM card number and CVV, believing the information to be genuine due to his lack of familiarity with such scams. Subsequently, on the same day, he received three messages confirming withdrawals totalling Rs. 5,000/- from his State Bank of India (“SBI”) account. Realizing he was defrauded, he urgently approached SBI, who assured him they halted further withdrawals. However, he later discovered two more withdrawals totalling Rs. 1,00,000/-. Despite his efforts, SBI refused to reimburse the Rs. 1,05,000/- lost to the fraud. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission, Hamirpur, Himachal Pradesh (“District Commission”) and filed a consumer complaint against SBI.

In response, SBI contended that the Complainant himself disclosed his CVV number and OTP to an unknown person which facilitated the unauthorized transactions. It argued that transactions cannot occur without the OTP being provided, implying the Complainant's negligence in safeguarding his banking information. Additionally, it claimed that the Complainant independently blocked his ATM card via a toll-free number and never instructed the bank to freeze his account.

Observations by the District Commission:

The District Commission noted that the Complainant had approached SBI, but it failed to thoroughly investigate the mode and details of the earlier fraudulent transactions via the Unified Payments Interface (UPI) system, which facilitated further unauthorized withdrawals amounting to Rs. 1,00,000/-. It emphasized that the UPI system, which integrates multiple bank accounts into a single mobile application, should have been scrutinized and possibly frozen upon the Complainant's complaint. It held that this lack of proactive action by SBI constituted a clear deficiency in service, as outlined under RBI guidelines, which stipulate that banks are liable to refund customers in cases of fraudulent transactions resulting from their negligence or deficiency, regardless of whether the customer reported it promptly.

Moreover, the District Commission noted the procedural lapse on the part of SBI in handling the Complainant's grievance. It pointed out that officials should have maintained a detailed record of the complaint and promptly taken steps to secure the Complainant's funds. By failing to deactivate all UPI accounts associated with the Complainant's details, the District Commission held that SBI further demonstrated negligence.

Therefore, the District Commission directed SBI to refund Rs. 1,00,000/- along with interest at 9% per annum. Additionally, SBI was ordered to pay a compensation of Rs. 20,000/- to the Complainant, in addition to litigation costs amounting to Rs. 10,000/-.

Case Title: Ashok Kumar vs State Bank of India

Case Number: 219/2021