A man from Assam lost Rs. 94,000 in a cyber fraud incident when attempting to return a blazer worth Rs. 4,000 from Louis Philippe. This case has now set a crucial legal precedent regarding customer liability and bank accountability.
How the Fraud Happened
The fraud began with a hacked Louis Philippe website, leaking customer information. A fraudster, posing as a company representative, tricked the victim into downloading a malicious app, allowing unauthorized access to his SBI account. Within hours, the stolen funds were transferred across multiple bank accounts, leaving the victim helpless.
Victim’s Fight for Justice
The victim reported the fraud immediately to SBI, registered an FIR, and lodged complaints with various authorities, including the Cyber Crime Cell. Despite this, SBI initially dismissed the case, citing the use of a third-party app, Google Pay, as the cause. The victim persisted, taking the matter to the RBI Banking Ombudsman, Gauhati High Court, and finally the Supreme Court.
High Court and Supreme Court Rulings
The Gauhati High Court ruled against SBI, criticizing the bank’s lack of action despite being informed of the fraud within hours. The Supreme Court upheld this decision, emphasizing that banks must use available technology to prevent unauthorized transactions and cannot shift blame to third-party apps.
Key Legal Observations
- RBI Circular Compliance: Clauses 8 and 9 of the RBI Circular (dated July 6, 2017) mandate that banks refund unauthorized transactions reported within three days unless the customer’s negligence is proven.
- Zero Liability: The courts determined that the victim had no liability, as no negligence was established.
- Bank’s Responsibility: The judgment highlighted SBI’s failure to lodge a chargeback request or take timely action to protect its customer.
Implications of the Judgment
This case reinforces that banks must proactively protect customers from cyber fraud. As Shreni Shetty, Partner at ANB Legal, notes, the judgment underscores the importance of banks adhering to RBI guidelines, ensuring swift redressal for victims of unauthorized transactions.
Final Thoughts
The Supreme Court’s decision is a significant win for customers, emphasizing the responsibility of banks in safeguarding accounts. It also serves as a reminder for individuals to report fraud promptly and remain vigilant about sharing sensitive information.
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