Consumer Forum Asks SBI To Return Rs5.88 Lakh Lost in Cyber Fraud by a Customer
Moneylife Digital Team 30 January 2023
Consumer dispute redressal commission, Wardha, has directed the State Bank of India (SBI) to remit Rs5.88 lakh after it was found that the Bank failed to address the complaint filed by the customer against a cyber-fraudster.
The commission also ordered the Bank to pay Rs30,000 towards physical and mental harassment and Rs20,000 towards litigation charges. Satish Lawhale, the complainant in the case, was represented by noted counsel Dr Mahendra Limaye, who regularly appears in consumer matters. 
In the order issued on 30 December 2022, the bench comprising PR Patil and Manjushri Khanake says, “The Bank miserably failed to implement the Reserve Bank of India (RBI)’s guidelines. The entire transaction pattern also demonstrates that the Bank’s dynamic check velocity mechanism would have easily detected the unusual high-volume denomination transaction. It did not, however, install the detection mechanism. The Bank has committed a deficiency in service by not providing such a mechanism for checking proper velocity.”
According to advocate Dr Limaye, it is faster to carry out online payment transfers. Still, when it comes to blocking fraudulent transactions, even if intimated at the earliest, the Banks and payment gateways move at a snail’s pace and try to blame consumers for their digital illiteracy and ignorance. 
This is why the consumer forum held that “When banks are negligent in protecting the money of victims, the banks should be made liable to pay the same.” 
Mr Lawhale, a retired Indian Army man, was asked to recharge his mobile plan to continue its service. The caller asked him to install a remote-control app as he could not recharge his mobile. After that, Mr Lawhale received two messages regarding the withdrawal of Rs5 lakh and Rs88,000 without sharing any one-time passcode (OTP) with anybody and the beneficiary of the entire amount was Novopay Solutions.
He immediately contacted the nearest branch of SBI at Ashti and informed them about the money debited from his account. He also requested SBI officials to block his account, but there was no action by the Bank. Mr Lawhale had the same experience when he approached the nearest police station to file a complaint. 
He, then, with the help of advocate Dr Limaye, filed a case before the consumer forum. In the complaint, he alleged negligence from SBI and requested a refund of the entire money debited from his account within a short period. 
During the hearing, SBI contented that the Bank has no role in this case. Holding Mr Lawhale guilty of failing to recognise the genuineness of the caller and then installing an app, the Bank says this resulted in the transfer of OTP and money from his account.  
Information shared by SBI shows that the money siphoned from Mr Lawhale’s account was transferred to Bengaluru-based Novopay Solutions, a money transfer platform. Almost 116 transactions took place in two hours; however, Novopay failed to raise an alert, Dr Limaye told the bench. 
Similarly, he submitted that Mr Lawhale’s account was witnessing transactions of about Rs5,000 per month and sudden transactions of Rs5.88 lakh within a short span should have triggered SBI’s dynamic volume check mechanism. However, SBI failed to raise the alarm.
Relying on various judgements, advocate Dr Limaye argued that it was not the negligence of Mr Lawhale, the complainant. “Still, it was digital accident and there is in built duty of care cast on Banks to monitor the customers transactions and block the same if deviation is observed in a normal pattern. Hence, the complainant should be refunded back the entire amount.”
“Adding a beneficiary (in a bank account) takes at least four hours and that the RBI has made it mandatory to verify the know your customer (KYC) of all customers before transferring funds. Despite this, SBI ignored safety precautions and allowed the transfer of the entire amount in ten minutes,” he says.
After the perusal of submissions and concerned documents, the bench held SBI and Novopay guilty of non-compliance to RBI guidelines. The bench says, “SBI should have sought consent for the transfer of funds, but it did not take care and acted negligently, resulting in losses to the complainant (Satish Lawhale),” 
The Bench then ordered the Bank to pay Rs5.88 lakh, Rs30,000 towards physical and mental harassment and Rs20,000 as litigation charges. 
Commenting on the order, advocate Dr Limaye says, “The judgement will have far-reaching impacts because in such cases, it is observed that banks only debit freeze the complainant’s account. However, most banks do not take further action to recall the money from the beneficiaries. They tend to wash their hands on arguments that the complainant himself passed on certain sensitive information.”
2 weeks ago
My sby credit card has just been fraudulently used by a known number nearby to my place that also on authorised website no around 1lakh ,dnt know whom to address,,whom to ask for help as it's not being settled yet though debited from my account,
[email protected]
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