In 2023, Axis Bank experienced a technical glitch where reward points from refunded credit card transactions weren’t reversed as per standard banking norms. Some customers exploited this loophole by making high-value purchases, earning points, and then canceling the transactions—while keeping the points intact. The glitch persisted until January 2024.
Retroactive Recovery and Legal Hurdles
After identifying the issue, Axis Bank initiated recovery efforts, asking customers to return the cash equivalent of the excess points. Shockingly, even former customers who had already closed their credit card accounts are receiving repayment demands. This is sparking debate over fairness, as these rules were introduced after many accounts were shut.
How Much Are Customers Being Asked to Pay?
Some users have received eye-watering repayment demands—₹23.25 lakh, ₹42.26 lakh, and ₹7.2 lakh, among others. Axis Bank has warned that failure to repay may lead to legal action, though experts question how the bank can enforce payments from closed accounts.
Legal and Ethical Concerns
Industry experts highlight that the clause enabling Axis Bank to recover negative rewards balances wasn’t present in earlier versions of its terms and conditions. Applying it retroactively is legally questionable. Moreover, many argue the bank should have had stronger controls to prevent such misuse in the first place.
What Should Affected Customers Do?
Active cardholders are advised to clear their negative balances to protect their credit scores and then raise complaints with the banking ombudsman. For former customers, the path is murkier, with some experts suggesting that escalation to regulatory bodies like the RBI or consumer courts might be necessary.
The Bigger Picture
While exploiting reward loopholes is unethical, experts argue that the primary fault lies with Axis Bank’s oversight. In the banking world, contractual obligations take precedence over moral arguments. As this case unfolds, it serves as a strong reminder: gaming the reward system may seem tempting, but banks always find a way to reclaim what’s lost.
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