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The Supreme Court recently gave a clear message to the banks that they cannot absolve customers of the responsibility for unauthorized transactions from their accounts. The court said that banks should use state-of-the-art technologies for customer security. Additionally, account holders are also advised to be cautious and avoid sharing OTP or other sensitive information with any third party.
case details
this decision State Bank of India (SBI) Came during the hearing of a petition against. A fraudulent transaction amounting to ₹94,204.80 was made from a customer’s account. The incident occurred when a customer became a victim of fraud during the process of returning goods after online shopping.
How did the fraud happen?
The swindler, posing as a customer service representative, asked the customer to download a mobile app. After this, unauthorized transactions were made from the customer’s account. The customer claimed that he never shared the OTP or M-PIN. SBI, on the other hand, argued that the transaction occurred due to sharing of information by the customer.
Referring to RBI rules
Gauhati High Court, while giving its verdict in favor of the customer in this case, ordered SBI to return the entire amount. High Court RBI’s 6th July 2017 Cited the circular of RBI, which states that if the customer immediately reports the incident of data breach to the bank, he will not be liable for unauthorized transactions.
Supreme Court decision
SBI challenged this decision of the High Court, but the Supreme Court rejected the appeal. The Supreme Court said:
- The customer reported the incident of fraud. within 24 hours The bank was informed.
- Banks to prevent unauthorized transactions advanced technologies Should be used.
- Account holders should also remain alert and under any circumstances OTP or password should not be shared,