Beware of Online Banking Frauds


Complainant being a company was using online banking facility provided by Respondent 1 & 2 being banks. All services like incoming, outgoing call and text message service for complainant mobile were suddenly barred by Respondent 3 being a telecom service provider. Some unknown person deactivated the Complainant mobile number and new SIM card was issued by Respondent no 3 to the fraudster without following due diligence. Complainant checked the balance of company account, he noticed fraudulent transactions of Rs 11,18,000 in the account and immediately spoke to officials of Respondent 2 and informed the same and requested to freeze the transaction amount transacted fraudulently which was transferred into three different accounts held with Respondents 4, 5 and 6 (banks). Complainant is claiming damages of Rs 13,31,975 (including interest and compensation) from the Respondent.


It was held that Respondents 1 & 2 have defaulted on multiple counts which fall within the ambit of 43A of the IT Act and were ordered to pay damages to the tune of Rs 2,00000 by way of compensation to the Complainant. Respondent banks 4,5 and 6 have also failed to adhere to strong KYC norms to prevent cybercrimes and also violated circular regarding Money Mule Accounts by not taking sufficient precautions and were ordered to pay damages to the tune of Rs. 4,00,000, 1,00,000 and 2,00,000 respectively by way of compensation. Respondent 3 by not following reasonable security practices and established guidelines before issuing a duplicate SIM card, has led to access of sensitive personal data to unauthorized person and was ordered to pay damages to the tune of Rs. 200000 by way of compensation.

From the above case, it can be inferred that Banks and companies like telecom service providers have to take utmost precautions in matters relating to the security of the customers, exercise due diligence regarding KYC norms and in matters falling within the ambit of the Information Technology Act, 2000 and the compliance of guidelines issued by RBI should be given utmost importance as well.