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Banks also responsible for frauds through ATM

india Updated: Oct 13, 2012 23:40 IST

In one of my columns last year, I had expressed deep concern over an order of the apex consumer court denying the victim of an ATM fraud the much needed relief. The order obviously was not in tune with the present-day realities vis-à-vis ATM scams and had set a bad precedent at a time when such thefts were on the rise.

Briefly, that case involved an 80-year old citizen who had lost all his life's savings amounting to Rs 65,116 through a fraudulent ATM transaction. In deep shock and distress, he had approached the consumer court at the district level. Taking note of the increasing number of such complaints being filed before it and also the fact that the bank had failed to show the CCTV footage, the consumer court had directed the bank to credit the amount to the consumer and also pay a compensation of Rs 15,000.

The purpose of installing CCTVs at ATMs was to detect such fraud and by not providing it, the bank was guilty of negligence and had to take responsibility for the fraud, the court at the district level had said. This had been upheld by the consumer court at the state level, but the National Consumer Disputes Redressal Commission had set this aside, thereby denying the victim his money lost through fraud. (State Bank of India Vs K.K.Bhalla, RP No 3182 of 2008, decided on April 7, 2011)

Now an order of the Banking Ombudsman should bring cheer to consumers — it not only upholds the rights of consumers who are victim to such ATM frauds, but also rightly recognises the importance of CCTV footage in all such cases.

Here, following a series of complaints alleging unauthorised debits through ATM transactions, the Ombudsman asked the banks to show the camera recording and found that in all the cases, a suspicious looking person with his face covered and having multiple cards was withdrawing money, till he cleaned out the account or the accounts were blocked by the customer or the bank.

On one occasion, it was found that he carried out almost 40 transactions in a row using more than 25 cards! All the complainants had claimed that they had not parted with their cards or PIN details and were in possession of the card when withdrawals took place.

"Although the bank's usual stand had been that the money cannot be withdrawn without compromising the security of card and PIN details, in view of the overwhelming circumstantial evidence suggesting that the withdrawals from ATMs were of fraudulent nature, awards were issued in all cases and banks were advised to pay the complainants the amounts fraudulently withdrawn", the Ombudsman said. (Annual report of the Banking Ombudsman scheme 2010-2011) This should come to the aid of consumers in similar circumstances.

S.N Rawat: My bank account shows an ATM withdrawal of Rs 20,000 , but I have never withdrawn that amount. Nor have I even tried to withdraw so much money through my debit card. The bank is unwilling to refund my money. What do I do?

Lodge a complaint with the economic offences wing of the police giving all details. Their investigation should help you. Simultaneously, write to the nodal officer of the bank . You can also use the RTI to find out if the bank has received more such complaints from other customers. You can also ask the bank to show you the CCTV footage of the ATM where the money was withdrawn.

If the bank does not respond positively, complain to the Banking Ombudsman. You can complain online. You can also find the order of the Ombudsman that I have referred to on the RBI website.