Issuance Of Unsolicited ATM Cards And Failure To Avoid Fraudulent Transactions, Gurgaon District Commission Holds SBI Liable For Deficiency In Service

Brief Facts:

Virender Singh Yadav (“Complainant”) received a message on his registered mobile from State Bank of India (“Bank”) stating that he had entered the wrong PIN, and a transaction was declined. Since the Complainant had the ATM card, he ignored the message assuming that it was sent in error. However, later on the same day, he discovered that Rs. 52,000 was deducted from his account through three unauthorized transactions. The Complainant immediately contacted the Bank officials on the customer care number and reported the unauthorized transactions. The customer care officials informed him that the transactions had occurred in Jharkhand, while the Complainant was at home in Gurugram.

The Complainant further alleged that the Bank issued two unsolicited ATM cards within a short period, violating the Master Circular no. RBI/2014-15/58, which prohibits Banks from dispatching unsolicited cards to customers, except as replacements for existing cards. Additionally, a police complaint was filed, and the Complainant repeatedly requested the Bank to refund the deducted amount, but his appeals were unheeded. Consequently, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Gurgaon (“District Commission”).

In response, the Bank and its officials presented a joint written statement, challenging the maintainability and cause of action. They contended that the Complainant's negligence in safeguarding his banking information led to the financial loss, asserting that the transactions were not binding on the Bank. The Bank argued that if the Complainant had acted promptly upon receiving the initial messages or contacted the Bank, the fraudulent transactions could have been prevented. They clarified that the disputed transactions were carried out using a specific card issued to the Complainant as a renewal card in May 2018, as per their instructions.

Observations by the Commission:

The District Commission noted that despite claiming that the Complainant was negligent in safeguarding crucial banking information, the Bank did not submit any evidence to support this claim. Further, it didn't provide any evidence that the Complainant shared his OTP, CVV number, PIN, or password with anyone.

Further, the District Commission noted that the Master Circular no. RBI/2014-15/58, dated July 1, 2014, clearly states that Banks should not dispatch an unsolicited card to a customer, except as a replacement for a card already held by the customer. The District Commission held that the Complainant did not make any request for the issuance of a new ATM card either verbally or in writing to the Bank. Referring to the instructions in the Master Circular, the District Commission held that the Bank failed to ensure the full security of the debit card, and any losses incurred due to a breach of security should be borne by the Bank. Since the Bank could not establish any negligence on the part of the complainant in the unauthorized transactions totalling Rs. 52,000/-, the District Commission held the Bank and its officials liable for deficiency in service. The District Commission referred to the case of HDFC Bank Limited Vs. Jesna Jose where the National Consumer Disputes Redressal Commission (NCDRC) held that the concerned Bank is responsible for any online fraud or loss unless it is proven that the fraudulent transaction occurred due to the fault of the account holders.

Consequently, the District Commission directed the Bank and its officials to pay the amount of Rs 52,000/- to the Complainant, Rs 30,000/- for harassment and mental agony and Rs 11,000/- for litigation costs.

Case Title: Virender Singh Yadav vs State Bank of India and others.

Case No.: Complaint Case No. 214 of 2020

Advocate for the Complainant: Triloke Mani Yadav

Advocate for the Respondent: Anil Yadav\

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