Credit Card Fraud: HDFC Bank Asked To Refund Rs24,000 with 7% Interest
Moneylife Digital Team 03 January 2024
While setting aside orders passed by fora below, the national consumer disputes redressal commission (NCDRC) directed HDFC Bank Ltd to refund Rs24,000 with an interest of 7%pa (per annum) and pay Rs10,000 litigation cost to a customer whose credit card was used for fraudulent transactions at midnight. 
In an order, last week, the NCDRC bench of Dr Inder Jit Singh (presiding member), says, "...the Complainant took all reasonable measures as were expected from him and there was no contributory negligence on his part with respect to credit card used by someone else fraudulently and he reported such transactions immediately to the Bank. Notwithstanding that such fraudulent transactions committed by someone else constitute a criminal offence, which is an independent matter to be taken to the criminal courts, the Complainant has his remedies open under the Consumer Protection Act with respect to deficiency in service or unfair trade practice against the Bank."
"...we hereby set aside the orders of Delhi state consumer disputes redressal commission as well as Delhi district consumer disputes redressal forum (east) and allow the complaint with directions to HDFC Bank to reverse the transactions with respect to the fraudulent transactions, which took place on 30 March 2014 for a total amount of Rs24,000. In case this amount has already been recovered from the Complainant, the Bank is liable to refund the same along with interest and penalty charged on such amount. Such refund shall be payable to the Complainant along with interest at 7%pa from the date it was received from the Complainant till the date of refund...," the bench says.
The case is related to fraudulent transactions on the credit card of New Delhi-based Parveen Kumar Jain. He has been using the credit card issued by HDFC Bank for the past 10 years and has an excellent track record. Someone fraudulently used his credit card on 30 March 2014 between 12:42am and 12:56am for multiple transactions worth Rs24,000. Mr Jain got a confirmation call from the HDFC Bank team regarding these transactions. He answered in the negative.  
The next day, Mr Jain contacted the customer care of HDFC Bank to know the status of the disputed transactions. He was requested to send a dispute form, and then the transaction would be reversed. He received another call from the Bank asking him to send a copy of the police complaint. 
Three days after sharing details of the police complaint, Mr Jain was again asked to send a progressive dispute form, which he sent to HDFC Bank. Despite completing all the formalities, HDFC Bank did not reverse the transaction but asked for money from Mr Jain, for which he says he was not liable.
He then filed a complaint before the district forum. However, the district forum dismissed the complaint, stating, "When the complainant (Mr Jain) has alleged fraud, the disputed question of facts needs proper investigation and trial which cannot be tried in the summary proceedings on the basis of (an) affidavit under Consumer Protection Act."
Mr Jain then approached the state commission. While upholding the order of the district forum, the state commission observed that issues involving disputes of a criminal nature cannot be handled under the provisions of the Consumer Protection Act under summary trial. 
Mr Jain filed a revision petition before NCDRC. In his submission, he referred to a circular issued by the Reserve Bank of India (RBI) where it is mentioned very clearly if the online misuse or fraud transactions are intimated within 10 days by the customer, then the customer is not liable to pay that amount. "HDFC Bank was intimated within 10 minutes instead of 10 days, so I am not liable to pay the misused transaction amount. The amount used by me has already been paid timely," he says.
The counsel for HDFC Bank contended that when Mr Jain raised a dispute regarding the transactions, it conducted a detailed investigation. "On investigation it was found out that the said transactions were online transactions using master secure code (MSC). The MSC password was sent on Mr Jain's registered mobile number and email address, which was only within his knowledge. The disputed online transaction would not have taken place without using that MSC password, which was only within the knowledge of Mr. Jain. The usage of the card was not possible without Mr Jain sharing or divulging the confidential details of the card with someone. Hence the liability of such transaction rests on Mr Jain and the same had been time and again intimated to him by HDFC Bank, which he willfully defaulted in payment of the outstanding amount till date despite several reminders and requests."
"The case of the petitioner suffers from non-joinder of necessary parties as Mr Jain failed to make FreeCharge and Sujav Business Pvt Ltd as a party to the present dispute. Since the disputed transactions were incurred with them and HDF Bank had duly made payment to them on behalf of Mr Jain as the transaction involved his credit card, hence both these entities are necessary parties for just and proper adjudication of the present dispute," the counsel argued.
The fora below dismissed Mr Jain's complaint, stating that the matter is related to fraud or criminal trial and hence, cannot be tried under the Consumer Protection Act. NCDRC, however, reiterated that the consumer fora has jurisdiction to look into the matters if there is a deficiency in service by the service-provider and not the criminal aspects of any transaction and banking is included as a 'service' under Section 2 (1)(o) of the Consumer Protection Act.  
"Hence the main question to be seen is not with respect to fraud or criminal trial per se but whether HDFC Bank was deficient in service or whether the Bank has committed any unfair trade practice while providing such service. The Complainant is a user of the credit card issued by HDFC Bank, hence falls under the definition of consumer and has a right to file complaint under the Consumer Protection Act," NCDRC says.
The bench also referred to guidelines issued by RBI. As per these instructions, there will be zero liability of a customer where the unauthorised transaction occurs in the event of contributory fraud or deficiency on the part of the bank. The instructions also take care of third-party breaches where the deficiency lies neither with the bank nor the customer but elsewhere in the system. If the customer notifies the bank of such a transaction within three working days, then zero liability lies with the customer.
In this case, Mr Jain took all reasonable measures as were expected from him and there was no contributory negligence on his part concerning his credit card used by someone else fraudulently, NCDRC said, while setting aside orders passed by the state commission and district forum. 
(Revision Petition No2082 of 2017  Date: 28 December 2023)
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