Banks not liable if you have been a victim of fraud or scams, says court

If somebody scammed your money out of your bank account or if you have been a victim of online fraud, your bank shall not liable to compensate you, says 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.

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.

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The very next day, when ₹39,358 of pension was deposited in Javia’s account, another ₹41,500 was simultaneously withdrawn.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.

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.

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.

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.