With Grievance Redress in the Stone Age, Who Benefits from Auto-debits?
Last night, Amazon messaged me to say that my Prime membership was up for renewal in about a week. I was told that there would be no auto-renewal (which I had not wanted in the first place) since “bank currently is unable to process new automatic/recurring payments on credit/debit cards.” Okay. No issue. It took me exactly a minute to renew the Prime membership, with two-factor authentication. And Amazon also benefits by getting my payment a week ahead.  
 
If you read and believed the orchestrated outrage on social media since 1st October over the Reserve Bank of India’s (RBI’s) decision to, finally, enforce the ban on auto-debits, you have probably decided that I do not deserve to benefit from the ease of online payments. Guess what? A majority of Indians—in fact, 83% of them—seem to think like me. They would rather take that minute for renewal of memberships and subscription payments than have their money auto-debited from their bank or credit card without a choice, even if the amounts involve small sums of money.
 
A survey by LocalCircles (read: https://www.localcircles.com/a/press/page/rbi-auto-debit-survey) shows that 83% of Indians, who paid for apps on Google Playstore, Apple App Store and Windows Store, support RBI’s decision to mandate one-time password (OTP)-based authentication for all app purchases and renewals for transaction up to Rs5,000 as well. The survey has 40,000 responses from 302 Indian districts. But we live in times when the noise on social media may not reflect the views or worries of ordinary people. 
 
LocalCircles says, consumers have been complaining of being locked into auto-debit, leading to unauthorised charges over a long time, since 2017. The complaints were escalated to RBI right then. Yet, mandatory auto-debits kept rising and the survey shows that only 23% of customers were given the OTP option while subscribing to apps in the past 12 months. As many as 46% said they had been wrongly charged or over-charged on auto-renewals in this period. 
 
The rules preventing auto-debit have been on the cards for two years. RBI had responded to public demand and asked the industry to implement verification through OTP in 2019 and the rules were to apply from March 2021.The deadline was extended to 30 September 2021 since banks claimed that they were unprepared and predicted chaos in the marketplace. A few did see the writing on the wall and encouraged subscribers to use alternatives such as Razorpay, Instamojo, etc.
 
Isn’t it ironic how any relaxation permitting faster on-boarding of customers or payments gets activated with extraordinary speed, while a consumer-safety feature was ignored to the point that ‘millions of transactions’ allegedly failed on 1st October? Perhaps, banks and multinationals were mistakenly confident about lobbying to push the deadline once again. 
 
Now consider how the outrage factory worked. A simple and effective way of fuelling outrage was to call customers between 2am and 5am (in the dead of the night) to verify the renewal of payments.  People were startled out of deep slumber and sent scrambling for their payment details out of fear that they were hacked or scammed. They were told this was in compliance with RBI rules and this was enough to get them to go ballistic on social media, without bothering about details. Influencers went into hyper mode to amplify the outrage. A political journalist even wanted to start a campaign against RBI’s attempt to protect us. Nobody paused to ask why the same companies that spam us relentlessly everyday could not send a simple email seeking renewal of the subscription. 
 
Those who oppose RBI’s action ask: Why force OTP verification on ‘low-impact transactions’, i.e., payments below Rs5,000? The feedback was that a large number of people, many of who are lower-income earners, were affected. Let us not ignore the fact that industry is super-efficient in collecting payments, but deliberately lethargic about everything else. Let me outline some issues. 
 
The Problem 
 
Apps that quickly store your credit cards without permission, make it extremely cumbersome, if not impossible, to cancel subscriptions, or even access/delete the stored cards. Maybe techies figure their way around things, but the art and science of designing a great user interface is to ensure that ordinary, non-tech people—your customers—ought to have a friction-free experience, not used against them. The biggest and most tech-savvy companies in the world are guilty of stealth and coercion when it comes to storing credit cards without explicit permission.
 
Despite repeated attempts, I have not been able to delete my husband’s card stored by Jio after making one payment on the Jio app! Big Basket (now a Tata company) had a sneaky auto-tick in fine print to save the card ‘for my convenience’. The process of deleting it is tedious and an escalated complaint made no difference. Why do we need an RBI order to protect us from such practices (failing to see a little pre-ticked sentence in tiny font seeking permission to store our card)? Fortunately, RBI has barred business from storing customer card data from 1 January 2022. Hopefully, they will take this deadline more seriously and work at alternatives.
 
The friction and harassment is greater when it comes to lodging complaints or dealing with increasingly sophisticated scams. A customer who is scammed is immediately back to struggling with archaic systems and processes. The industry does not care to use its financial muscle and lobbying powers to change that part of the business. Moneylife Foundation has handled hundreds of horror stories and we know that redress is extremely poor. Here are a few things that need collaborative action. 
 
Practical Complaint Mechanism: A couple of weeks ago, senior journalist Prosenjit Datta, tweeted about his experience of being scammed by a fake Goibibo app (https://twitter.com/prosaicview/status/1450489304145301510?s=21). At the end of his narrative, he makes an important point. A complaint to the cyber cell requires the complainant to provide transaction details like exact time, merchant name, etc. None of these is available to a customer if her account or debit card is blocked.
 
Then there is Rajesh Aerat who had his wallet stolen from his car and his card misused. Since he and his friends on a trek were victims, they had to file a first information report (FIR) at a police station. This took several hours, which is a lifetime for a digital scamster. His mistake was not to block his cards before lodging an FIR. When he attempted it, he discovered his ATM PIN had been changed and he could no longer auto-block his card using that facility. The scammer appears to have changed the transaction limits on his card to withdraw Rs9.09 lakh through 71 different transactions. He also transferred money from one account to another to enable payments. 
 
ICICI Bank, despite repeated and continuous follow-ups, refuses to explain how and why its systems did not flag his card or raise a red alert at 71 transactions in a few hours or why the cash withdrawal cap of Rs1 lakh failed. The scamster clearly knew ICICI Bank’s systems well; but the victim is also a tech-savvy engineer from BITS Pilani. Our complaint systems are in the Stone Age, but ever hear industry lobbying to transform complaint mechanisms? This is the grim reality of grievance redress in India, do we still want to protest RBI’s rare attempt to make things slightly safer for us?
 
Sophisticated Scams: Mr Datta’s case raises another important issue. First, who should be responsible for tracking and warning customers about highly sophisticated fakes? Just as he was fooled by a fake Goibibo app, a Twitter handle masquerading as the official account of ICICI Bank fooled many of us. The use of digital media teams to redress customer grievances, which is a part of corporate image management, was a very welcome move. Even public sector undertakings respond well to complaints on social media. But what happens when fake handles lure people to part with information? It is easy to blame the customer in these situations, but the industry has far better resources to track and shut down such fakes as well as the clout to ensure that social media giants respond quickly to them. 
 
While I support RBI’s decision on the OTP verification, the banking and payments regulator, although far more receptive under governor Shaktikanta Das, has a long way to go before it begins to understand, hear and act on issues faced by ordinary people.
Comments
bkarandikar
1 month ago
This is extremely important,
Even some brocking sites don't allow translation without mandate
So sad
karan.r.gandhi
1 month ago
Experienced something similar with Jio on their website before they created an app. Back then I managed to somehow delete my card details and made sure not to save it ever again.



With Big Basket the issue I faced recently was of trying to cancel my BB Star membership. I was unable to find an option to cancel the subscription either on the app or website and had to reach out to their customer support to cancel the membership.



Apple is another culprit where Auto Renew was the only option when subscribing for YouTube Premium through the App store. What's worse was that I would never receive an SMS notification from the bank when the credit card was charged but I would only get to see the charge in my statement the following month.
dummytg
Replied to karan.r.gandhi comment 1 month ago
I even contacted google to send me email before auto charging for YouTube premium but they refused, saying security concern to share the information on email. What insanity exists in market to not even update for auto payment.
aarvee001
1 month ago
Can use of prepaid cards be a quick and easy solution.
dummytg
Replied to aarvee001 comment 1 month ago
Ideally there must be one place which can be accessed based on PAN and entire auto payment can be reviewed and cancelled.
jusojosu
1 month ago
There are some points what readers here should be aware about.

1) By not automatically paying for a charge that has become due in your name and then raised against your card by the Creditor doesn't mean you are not liable to pay it or you are free from not paying it (other than those prepaid apps you pay upfront on your mobile app store) . It is not simple as declining or ignoring the request to pay your outstanding dues at your local kirana store. If an outstanding sum has already become due in your name, legally you will be liable to clear the outstanding dues by other mode of payment. If not there is a possibility that these companies will report your payment default to CIBIL and it will affect your credit score. The companies you owe money to might even pass your outstanding debt to debt collection agencies who will then add their own recovery charges and recover it from you.

2) It is not like the whole automatic payment system what we are used to has stopped. It has only taken a new form, but under the new system the customers will have the automatic debit kill switch under their control through the new e-mandate management feature on their banking software. The problems of the old system will continue until unless the card holder knows how to use and disable the individual e-mandates in their net-banking portal.
anant.9196
Replied to jusojosu comment 1 month ago
The prime argument pertains to Advance payment of subscriptions etc which one wanted to try out but got resubscribed due the auto renewal process!
Therefore for use cases of paying debt or for expenses already incurred definitely one has to pay !
anant.9196
1 month ago
Yes you have nailed it. The lack of efficient redressal systems is the single biggest reason that this move by RBI is welcome.
An article in The Ken argued vehemently to the contrary stating how this move was detrimental especially to smaller subscription businesses. But on reflection it is clear that this negative to small subscription business is a one time problem that these businesses would surely resolve and is much outweighed by the continuing problems that the ordinary and especially small budget customers will be facing. I guess The Ken being a subscription business itself was biased on this aspect.
Thanks for clearing the air on this one of or me.
anant.9196
1 month ago
Yes you have nailed it. The lack of efficient redressal systems is the single biggest reason that this move by RBI is welcome.
An article in The Ken argued vehemently to the contrary stating how this move was detrimental especially to smaller subscription businesses. But on reflection it is clear that this negative to small subscription business is a one time problem that these businesses would surely resolve and is much outweighed by the continuing problems that the ordinary and especially small budget customers will be facing. I guess The Ken being a subscription business itself was biased on this aspect.
Thanks for clearing the air on this one of or me.
Chandragupta Acharya
1 month ago
Very apt. No auto debit should be allowed without customer consent since grievance redressal is almost absent in our country. Two other points I may bring to your attention: 1. Banks themselves debiting customer accounts for random charges without customer consent. 2. Corporates contacting customers over WhatsApp without consent, leading to WhatsApp getting access to customer data.
dummytg
1 month ago
One of the violator of auto-debit is NACH facility. Though NPCI specifies that NACH e-mandate is allowed to be cancelled by the subscriber either through destination bank or through the corporate who initiates the NACH. And as per NPCI, this must be a online feature.
However BANKS are the violators. SBI, ICICI, HDFC BANK have no provision to cancel NACH through their website. Only KOTAK Bank provides this facility to customers.

I made a mistake to enable few e-NACH (my mistake), considering I can cancel it, however there is absolutely No way. The CRED App by Kunal Shah is so un-professional that they even don't know that through autopay they are collecting e-NACH mandate, and even refuse to provide any information.

Social media is full of issues related to NPCI. Cake on the ICE is, even NPCI does not respond and NPCI is not covered under RTI.
BALRAJ AMARAVADI
1 month ago
I hope, same rule to be applied for auto debit transactions from bank accounts too. example: central accidental, life insurance policies premiums were auto debited from different bank accounts for same policy for same person!
kgng59
1 month ago
I support the RBI.I had to block my credit card due to auto debit without my knowledge
jusojosu
Replied to kgng59 comment 1 month ago
Make sure to terminate the contract with the company for which the auto debit was charged to your card. Blocking the auto debit itself does not mean you are terminating the originating contact. Most companies will keep on accruing the amount under your account without your knowledge and then sell it to debt collection agencies. Debt collection agencies will then add an heavy debt recovery charges to it and then come after you. This itself is a business model for many evil companies.

In short, make sure to terminate the originating contract itself and not just block the auto debits.
kpushkar
1 month ago
Very true.. i am getting auto debit for Moneycontrol pro app .. which i do not want !! Very difficult to stop it
Bajaj finance charged rs 250 odd for card nonuse , gave in writing that money will be refunded..but i never got the money. They have at least say 1 cr customers x 250 = 250 cr addition to profit without any effort . Very cheap way of working
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