Union Bank ordered to pay compensation to customer for unauthorized withdrawal from account

In a recent case adjudicated by the District Consumer Disputes Redressal Commission – I, Hyderabad (Telangana), involving Mrs. Umabala Chunduru (“Complainant”) and Union Bank of India (“Bank”), the Commission found the bank liable for deficiency in services. The Commission, consisting of B. Uma Venkata Subba Lakshmi (President) and C. LAKSHMI PRASANNA (Member), issued the following determinations:

Background:

Mrs. Umabala Chunduru, a senior citizen, encountered unauthorized transactions of Rs. 88,232/- on her Savings Bank Account and Credit Card, stemming from a fraudulent online purchase incident in 2022.

Bank’s Partial Refund:

The bank partially refunded Rs. 20,790/- but failed to reimburse the remaining amount of Rs. 67,437.52/-, prompting the filing of a consumer complaint.

Bank’s Defense:

The bank argued that the complaint involved third-party fraud and fell outside the consumer protection scope, citing RBI Guidelines related to customer negligence.

Commission’s Refutation:

The District Commission rejected the bank’s defense, emphasizing the Complainant’s prompt reporting of unauthorized transactions within the stipulated period.

Security Measures and Authentication:

Despite the Complainant sharing her Credit Card details over the phone, the District Commission stressed the necessity of multi-factor authentication. It noted the absence of evidence regarding OTP transmission to the Complainant’s registered phone number.

RBI Notification on Digital Payment Security Controls:

The Commission referenced the RBI Notification on Digital Payment Security Controls, underlining the importance of robust security measures. It dismissed the bank’s claim of contributory negligence.

Deficiency in Service:

The bank’s partial refund and failure to resolve the remaining amount after six months led the District Commission to hold the bank liable for deficiency in service.

Commission’s Directives:

The Commission directed the bank to refund the balance amount of Rs. 67,437.52/- with interest, compensate the Complainant with Rs. 20,000/-, and pay Rs. 20,000/- for litigation costs.