Banks are not liable to cough up payments if you have been a victim of fraud or scams

Banks are not liable to cough up payments if you have been a victim of fraud or scams
A consumer court in Gujarat has ruled that a SBI customer and victim of bank fraud is not liable for compensationBCCL
  • A consumer court in Gujarat has denied a fraud victim’s claim for compensation because he voluntarily shared his ATM card details.
  • The victim lost ₹41,500 as he was scammed by a person posing as a manager at the State Bank of India (SBI).
  • According to the court, the victim did not follow the numerous advisories and guidelines issued by SBI, which puts the burden of negligence on him.
  • However, the National Consumer Disputes Redressal Commission (NCDRC) and the Reserve Bank of India (RBI) say otherwise.
If you have been a victim of a bank fraud or somebody has scammed money out of your bank account, the bank is not liable to compensate you for your loss, according to a consumer court in Gujarat.

The Consumer Dispute Redressal Commission in Amreli denied compensation of a victim of fraud who got duped of ₹41,500. According to the Times of India, the court believes that the fraud occurred due to the individual’s own negligence, alleviating any responsibility on the art of the bank.

However, in the past, the National Consumer Disputes Redressal Commission (NCDRC) held that banks are liable to pay its customers in cases of unauthorised transactions. According to the court, the bank cannot rely on arbitrary terms and conditions to ‘wriggle out’ of its liability.

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Even as per the Reserve Bank of India (RBI), if the transaction happens due to a third party breach — by someone other than the bank or the customer — and the customer notifies the bank within three working days, then the customer is not responsible in any way.

Time taken to report fraudulent transactionCustomer’s liability
Within three working daysZero liability
Within four to seven working daysRanges from ₹5,000 to ₹25,000
Beyond seven working daysAs per the bank’s approved policy
Source: RBI

How did the fraud occur?
Kurji Javia, a retired teacher who now practices law, was called by someone posing as a State Bank of India (SBI) manager on 2 April 2018. The scamster asked for Javia’s ATM card details, which he gave assuming that he was speaking to a figure of authority.

The very next day, when ₹39,358 of pension was deposited in Javia’s account, another ₹41,500 was simultaneously withdrawn. On spotting the transactions, he frantically called the bank but did not receive any response. It was later revealed that the fraudsters used the money to go online shopping.
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He claims that the bank could have prevented the loss if they had responded more proactively. On that basis he sued SBI for the lost amount as well as ₹30,000 for harassment.

Is the bank responsible?
The consumer court asserted that banks give customers ample warning to not share their ATM card details or bank account details with anyone.

Not only do banks put out advisories, guidelines on the notice board, and splatter cautionary messages across social media — they also message customers informing them that no bank employee will ever call asking for ATM card details.
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According to the court, Javia did exactly what the banks advised customers not to do. He did not follow any of the guidelines for safe transactions by the bank, which means negligence was not on part of the banks.

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