Credit Cards: ‘Credit Card Customer Can Refuse To Pay for Fraudulent Transactions’
Failure to provide SMS alerts constitutes negligence on the part of the bank issuing the credit card, according to the South Mumbai District Consumer Disputes Redressal Forum (SMDCDRF).
Executive Airways was banking with Union Bank of India. The Bank issued a Visa credit card to Pradeep Kumar Thampi, the company’s director. Mr Thampi sent a letter to the Bank requesting for SMS alerts for transactions on the credit card. The Bank did not activate the service. During the period between 1 June 2011 and 4 June 2011, the credit card was fraudulently used for several transactions; but due to absence of SMS alerts, Mr Thampi did not get to know about it until he received the bill much later. He took up the matter with the Bank, disputing the transactions worth Rs4,65,855 in Paris. He proved that he was not in Paris at that time, as borne out by his passport. These were online transactions. Mr Thampi alleged that the fraud took place through duplication of his card by cloning. Mr Thampi was informed that Visa had not honoured the claim, so he must pay up for the disputed transactions. Yet, transactions worth Rs1,06,766 were reversed.
Mr Thampi filed a complaint before the SMDCDRF for quashing the disputed transactions. After overruling some technical objections on jurisdiction raised by Union Bank of India, the Forum concluded that the Bank had acted negligently, which constituted a deficiency in service as well as an unfair trade practice. The Forum quashed the demand of Rs3,59,588 for the disputed transactions and also the amounts for retrieval of charge slips. The Forum also directed the Bank to pay Mr Thampi Rs20,000 towards costs and compensation for harassment and tension.